UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 27, 2006

THE WESTERN UNION COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware   001-32903   20-4531180

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

12500 East Belford Avenue

Englewood, Colorado

  80112
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (866) 405-5012

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 1.01. Entry into a Material Definitive Agreement

On September 29, 2006 (the “Distribution Date”), the distribution (the “Distribution”) by First Data Corporation (“First Data”) of all of the outstanding shares of common stock of The Western Union Company (“Western Union” or the “Company”) to the stockholders of First Data was completed in a spin-off intended to qualify for tax-free treatment.

On the Distribution Date, and in consideration for the contribution by First Data to Western Union of its money transfer and consumer payments businesses, Western Union transferred to First Data $100.0 million in cash, notes with an aggregate principal amount of $1.0 billion and 765,255,173 shares of Western Union common stock, par value $0.01 per share.

In connection with the Distribution, Western Union entered into certain agreements with First Data to govern the terms of the spin-off and to define the ongoing relationship between Western Union and First Data following the spin-off, allocating responsibility for obligations arising before and after the spin-off, including obligations with respect to liabilities relating to First Data’s business and to Western Union’s business and obligations with respect to each company’s employees, certain transition services and taxes.

Separation and Distribution Agreement

On the Distribution Date, Western Union entered into a Separation and Distribution Agreement with First Data which provides, among other things, for the principal corporate transactions required to effect the contribution by First Data of the subsidiaries that operate Western Union’s business, the distribution of Western Union common stock to the holders of record of First Data common stock and certain other agreements governing Western Union’s relationship with First Data after the spin-off. The contribution by First Data to Western Union of the subsidiaries that operate Western Union’s business and related assets occurred immediately prior to the Distribution. The contribution was made on an “as is, where is” basis without any representations or warranties, and Western Union will bear the economic and legal risk of the contribution. First Data generally will not retain any of the liabilities of the subsidiaries contributed to Western Union or liabilities associated with the related assets contributed to Western Union, and Western Union and the contributed subsidiaries have agreed to perform and fulfill all of the liabilities arising out of the operation of the money transfer and consumer payments businesses. A copy of the Separation and Distribution Agreement is attached hereto as Exhibit 2.1 and incorporated herein by reference into this Item 1.01.

Tax Allocation Agreement

On the Distribution Date, Western Union entered into a Tax Allocation Agreement with First Data that sets forth the rights and obligations of First Data and Western Union with respect to taxes imposed on each company’s respective businesses both prior to and after the spin-off and taxes and other liabilities that could be imposed as a result of a final determination by the Internal Revenue Service that is inconsistent with the anticipated tax consequences, as set forth in the private letter ruling received by First Data from the Internal Revenue Service, in connection with the spin-off (and certain related transactions) if such transactions do not qualify for tax-free treatment under the Internal Revenue Code. A copy of the Tax Allocation Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference into this Item 1.01.

Employee Matters Agreement

On the Distribution Date, Western Union entered into an Employee Matters Agreement with First Data which provides for each company’s respective obligations to employees and former employees who are or were associated with Western Union and for other employment and employee benefits matters. A copy of the Employee Matters Agreement is attached hereto as Exhibit 10.2 and incorporated herein by reference into this Item 1.01.

Transition Services Agreement

On the Distribution Date, Western Union entered into a Transition Services Agreement with First Data pursuant to which First Data and Western Union will provide each other with a variety of administrative services for a period of time following the spin-off. Services provided by First Data to Western Union include data center

 

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hosting; disaster recovery and monitoring services; call center support, network connectivity, system support (e.g., financial, legal, human resources, treasury and audit systems); information security system support; payroll; benefits; and human resources. First Data has agreed to make each service available to Western Union on an as-needed basis for a period of time not to exceed one year following the Distribution Date. The fees charged for the services will be based on either cost plus or local market conditions for comparable services. A copy of the Transition Services Agreement is attached hereto as Exhibit 10.3 and incorporated herein by reference into this Item 1.01.

Patent Ownership Agreement

On the Distribution Date, Western Union entered into a Patent Ownership Agreement and Covenant Not to Sue with First Data which will govern the ownership of and rights relating to certain patents. A copy of the Patent Ownership Agreement and Covenant Not to Sue is attached hereto as Exhibit 10.4 and incorporated herein by reference into this Item 1.01.

Money Order Agreement

Prior to the Distribution Date, Western Union Financial Services, Inc., which became an indirect wholly owned subsidiary of Western Union in connection with the spin-off, entered into a Retail Money Order Issuance and Management Agreement with Integrated Payment Systems Inc., a subsidiary of First Data. A description of the Retail Money Order Issuance and Management Agreement was included in Western Union’s Registration Statement on Form 10, and a form of the agreement was filed as an exhibit to the Registration Statement on Form 10. A fully-executed copy of the Retail Money Order Issuance and Management Agreement is attached hereto as Exhibit 10.5 and incorporated herein by reference into this Item 1.01.

Revolving Credit Agreement

On September 27, 2006, Western Union entered into unsecured financing facilities in an aggregate amount of $1.5 billion with a syndicate of lenders including Citibank, N.A., as administrative agent, Wells Fargo Bank, National Association, as syndication agent, and Citigroup Global Markets Inc. and Wells Fargo Bank, National Association, as joint lead arrangers and joint book runners (the “Western Union Financing Facility”). On September 29, 2006, Western Union made an initial borrowing under the Western Union Financing Facility in an aggregate principal amount equal to $100 million in connection with the spin-off.

The Western Union Financing Facility provides for a $1.5 billion revolving credit facility, a $250 million letter of credit subfacility and a swing line subfacility in the amount of up to $150 million. The Western Union Financing Facility contains certain covenants that limit or restrict indebtedness of significant subsidiaries and Western Union’s or any significant subsidiary’s incurrence of liens, mergers and consolidations and sale and leaseback transactions, subject to certain exceptions. Western Union is also required to maintain compliance with a consolidated interest coverage ratio covenant. The final maturity date of the Western Union Financing Facility is September 27, 2011.

A copy of the Western Union Financing Facility is attached hereto as Exhibit 10.6 and incorporated herein by reference into this Item 1.01.

FFMC Bridge Loan

On September 27, 2006, First Financial Management Corporation (“FFMC”), the outstanding capital stock of which was contributed by First Data to Western Union on the Distribution Date, entered into an unsecured financing facility in an aggregate amount of $2.4 billion with a syndicate of lenders including Citicorp North America, Inc., as administrative agent, Wachovia Bank, National Association, as syndication agent, and Morgan Stanley Bank, as documentation agent (the “FFMC Bridge Loan”). On September 29, 2006, FFMC borrowed under the FFMC Bridge Loan an aggregate principal amount equal to $2.4 billion in connection with the spin-off.

The FFMC Bridge Loan provides for a $2.4 billion term credit facility. The FFMC Bridge Loan contains certain covenants that limit or restrict indebtedness of significant subsidiaries and FFMC’s or any significant

 

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subsidiary’s incurrence of liens, mergers and consolidations and sale and leaseback transactions, subject to certain exceptions. The final maturity date of the FFMC Bridge Loan is September 26, 2007.

A copy of the FFMC Bridge Loan is attached hereto as Exhibit 10.7 and incorporated herein by reference into this Item 1.01.

Director Indemnification Agreements

On the Distribution Date, Western Union entered into director indemnification agreements with the following individuals, each of whom is an outside director of the Company: Jack M. Greenberg, Dinyar S. Devitre, Betsy D. Holden, Alan J. Lacy, Linda Fayne Levinson, Roberto G. Mendoza, Michael A. Miles and Dennis Stevenson. Under each indemnification agreement, Western Union has agreed to indemnify and hold harmless each individual to the fullest extent permitted or authorized by the General Corporation Law of the State of Delaware in effect on the date of each indemnification agreement or as such laws may be amended or replaced to increase the extent to which a corporation may indemnify its directors. A copy of the form of director indemnification agreement is attached hereto as Exhibit 10.8 and incorporated herein by reference into this Item 1.01.

Executive Officer Employment Agreements

Employment Agreement with David G. Barnes, Executive Vice President, Finance and Strategic Development

Western Union is a party to an employment agreement with David G. Barnes, pursuant to which Mr. Barnes will serve as executive vice president of finance and strategic development of the Company. The terms of Mr. Barnes’ employment agreement provide for (i) an annual base salary of $475,000, subject to merit increases, (ii) a guaranteed bonus of 70% of Mr. Barnes’ annualized base salary for 2006, prorated from August 15, 2006 through December 2006, (iii) eligibility to participate in the Senior Executive Incentive Plan of the Company, (iv) sign-on bonus of $75,000, subject to forfeiture if Mr. Barnes’ employment is terminated within 12 months of his start date, unless such termination is involuntarily and not for cause, (v) eligibility to participate in the Company’s retirement, health, welfare and financial security benefit programs, (vi) eligibility for an annual target grant of either stock options or a combination of stock options and restricted stock with respect to the Western Union common stock of approximately two times Mr. Barnes’ base salary and (vii) relocation assistance. The terms of Mr. Barnes agreement also provides that Mr. Barnes will be eligible for a grant of stock options to purchase 50,000 shares of common stock of First Data, which options were replaced with substitute Western Union stock options in connection with the spin-off. The employment agreement does not have a fixed term and may be terminated by either party at any time for any reason, provided that if Mr. Barnes’ employment is involuntarily terminated and not for cause within the first two years of employment, Mr. Barnes will be eligible for 24 months termination pay equal to $1,615,000 subject to Section 409A of the Internal Revenue Code (“Section 409A”). If, however, the applicable Western Union Executive Severance Plan provides for a severance payment that is equal to or greater than the severance payments provided for under the employment agreement, then Mr. Barnes will receive severance benefits equal to the applicable Western Union executive severance plan rather than the terms of the employment agreement. After the second anniversary of his employment date, Mr. Barnes will be subject to the then applicable Western Union executive severance plan, if any.

A copy of Mr. Barnes’ employment agreement is attached hereto as Exhibit 10.9 and incorporated herein by reference into this Item 1.01.

Employment Agreement with Scott T. Scheirman, Executive Vice President and Chief Financial Officer

On September 30, 2006, the Company entered into an employment agreement with Scott T. Scheirman pursuant to which Mr. Scheirman will serve as executive vice president and chief financial officer of the Company and as a member of the Western Union Executive Committee. The terms of Mr. Scheirman’s employment agreement provide for (i) an annual base salary of $425,000, subject to merit increases, (ii) eligibility to participate in the Company’s 2006 Long-Term Incentive Plan and Senior Executive Incentive Plan, (iii) receipt, on or about September 29, 2006, of Western Union stock options and restricted stock valued at approximately $1,912,500, (iv) financial planning services, (v) eligibility to receive stock options, restricted stock and other compensation

 

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consistent with similarly situated members of the Executive Committee and (vi) eligibility to participate in the Company’s retirement, health and welfare programs on the same basis as similarly situated employees. The employment period under the employment agreement commences on October 1, 2006 and, unless terminated earlier pursuant to the terms of the employment agreement, ends on November 30, 2008. The employment agreement provides that during February 2008, either Western Union or Mr. Scheirman may give notice to the other party that the employment relationship will terminate effective November 30, 2008 (the “Termination Election”). The employment agreement further provides that the employment relationship may be terminated by Mr. Scheirman prior to February 29, 2008, subject to the Company’s right to cure, for good reason (as defined in the employment agreement) or by the Company prior to February 29, 2008 other than for cause (as defined in the employment agreement) (the “Good Reason or No Cause Termination”). The terms of Mr. Scheirman’s employment agreement provide for the following termination payments and provisions: (i) termination payments equal to two times the sum of Mr. Scheirman’s annual base salary and annual target bonus plus a prorated amount of Mr. Scheirman’s annual target bonus payable to Mr. Scheirman for 2008, in the case of a Termination Election, or the year in which termination occurs, in the case of a Good Reason or No Cause Termination, to be paid, subject to Section 409A, over a 24 consecutive month period, commencing on November 30, 2008, in the case of a Termination Election, or on the date of termination, in the case of a Good Reason or No Cause Termination; (ii) effective March 1, 2008, in the case of a Termination Election, or the termination date, in the case of a Good Reason or No Cause Termination, the vesting of all non-qualified stock options and restricted stock awards granted in connection with the spin-off and any other non-qualified stock options and restricted stock awards granted from the date of the spin-off through February 29, 2008, in the case of a Termination Election, or the termination date, in the case of a Good Reason or No Cause Termination; (iii) Mr. Scheirman’s unvested awards will be exercisable until February 28, 2009, in the case of a Termination Election, or for three months following the termination date, in the case of a Good Reason or No Cause Termination, subject, in both cases, to Section 409A or until the terms of such awards have expired, if earlier and (iv) lump sum payment equal to the difference in cost between COBRA premiums and active employee premiums for 18 months of COBRA coverage. The Company’s executive severance plan will govern Mr. Scheirman’s termination in the event of a change of control.

A copy of Mr. Scheirman’s employment agreement is attached hereto as Exhibit 10.10 and incorporated herein by reference into this Item 1.01.

Adoption of Equity Compensation, Incentive and Other Benefit Plans

On September 28, 2006, Western Union adopted and First Data, in its capacity as the sole stockholder of Western Union prior to the Distribution, approved, the following equity compensation, incentive and other benefit plans for its executive officers, general employees and non-employee directors:

 

    The Western Union Company 2006 Long-Term Incentive Plan (the “2006 LTIP”)

 

    The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (the “2006 Director’s Plan”)

 

    The Western Union Company Non-Employee Director Deferred Compensation Plan (the “Deferred Compensation Plan”)

 

    The Western Union Company Severance/Change in Control Policy (the “Severance Plan”)

 

    The Western Union Company Senior Executive Incentive Plan (the “SEIP”)

 

    The Western Union Company Supplemental Incentive Savings Plan (the “SISP”)

 

    The Western Union Company Grandfathered Supplemental Incentive Savings Plan (the “Grandfathered SISP”)

2006 LTIP

The purposes of the 2006 LTIP are (i) to advance the interests of Western Union by attracting and retaining high caliber employees and other key individuals, (ii) to align the interests of Western Union’s stockholders and recipients of awards under the 2006 LTIP by increasing the proprietary interest of such recipients in Western Union’s growth and success and (iii) to motivate award recipients to act in the long-term best interests of Western Union and its stockholders. Awards under the 2006 LTIP may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock awards,

 

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(iv) restricted stock unit awards, (v) phantom stock units, (vi) performance grants and (vii) bonus awards. A copy of the 2006 LTIP is filed as Exhibit 10.11 to this Current Report on Form 8-K and incorporated herein by reference thereto.

2006 Director’s Plan

The purpose of the 2006 Director’s Plan is to advance the interest of Western Union and its stockholders by encouraging increased stock ownership by the Company’s outside directors, in order to promote long-term stockholder value through continuing ownership of Western Union’s common stock. The 2006 Director’s Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, unrestricted stock awards and restricted stock units. A copy of the 2006 Director’s Plan is filed as Exhibit 10.12 to this Current Report on Form 8-K and incorporated herein by reference thereto.

Deferred Compensation Plan

The Deferred Compensation Plan allows those non-employee directors of Western Union selected by the compensation and benefits committee of Western Union’s Board of Directors to elect to defer the receipt of all or any portion of their annual retainers otherwise payable to them in their capacity as non-employee directors of the Company. Elections under the Deferred Compensation Plan will result in the grant of stock options and unrestricted stock units authorized by the 2006 Director’s Plan. A copy of the Deferred Compensation Plan is attached hereto as Exhibit 10.13 and incorporated herein by reference into this Item 1.01.

Severance Plan

The Severance Plan provides for the payment of certain benefits to senior executives of Western Union upon termination of employment from Western Union and upon a change in control of Western Union. The purpose of the Severance Plan is to promote uniform treatment of senior executives who are involuntarily terminated other than for “cause” or who, following a change in control of Western Union, are involuntarily terminated other than for “cause,” or terminate for good reason within twenty-four months after a change in control, and to afford such executives and other employees the opportunity to protect the share value they have helped create in the event of any change in control. The Severance Plan provides for the following severance benefits, which will be the same in the event of a change in control or involuntary termination other than for “cause” except as indicated below:

 

    A cash payment equal to the senior executive’s base pay plus target bonus for the year in which the termination occurs, multiplied by two.

 

    A cash payment equal to the senior executive’s prorated bonus at target for the year in which the termination occurs.

 

    Provided that the senior executive properly elects continued health care coverage under applicable law, a lump sum payment equal to the difference between active employee premiums and continuation coverage premiums for eighteen months of coverage.

 

    Upon a change in control only, all equity compensation awards that were made pursuant to the 2006 LTIP, including those that are performance based, will become fully vested and exercisable on the date of the change of control and the right to exercise awards will continue twenty-four months (thirty-six months in the case of the Chief Executive Officer) after the senior executive’s termination (but not beyond their original terms).

 

    If a senior executive is involuntarily terminated without cause and no change in control has occurred, stock options granted pursuant to the 2006 LTIP will continue to vest and be exercisable for twenty-four months (thirty-six months in the case of the Chief Executive Officer) after the senior executive’s termination (but not beyond their original terms), and restricted stock awards and restricted stock unit awards will vest on a prorated basis based on the period from the grant date to the termination date.

 

    If severance benefits payable after a change in control exceed 110% of the maximum amount of such benefits that would not be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, an additional cash payment in an amount that after payment of all taxes on such benefits (and on such amount) provides the senior executive with the amount necessary to pay such tax. (If the severance benefits so payable do not exceed such 110% threshold, the amount thereof will be reduced to the maximum amount not subject to such excise tax.)

 

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A copy of the Severance Plan is attached hereto as Exhibit 10.14 and incorporated herein by reference into this Item 1.01.

SEIP

The SEIP will become effective on January 1, 2007 and will allow Western Union to make annual incentive awards to eligible participants to provide them with an incentive to carry out the Company’s business plan and to reward them for having done so. Western Union’s compensation and benefits committee intends to set performance goals under the SEIP in each year at the beginning of the year, and expects that it will determine the bonuses based on an evaluation of our performance in light of those goals. Amounts payable under the SEIP are intended to qualify as qualified performance based compensation under Section 162(m) of the Internal Revenue Code such that amounts payable under the SEIP would be fully deductible, to the extent permitted by applicable law. A copy of the SEIP is attached hereto as Exhibit 10.15 and incorporated herein by reference into this Item 1.01.

SISP

The SISP provides a select group of senior management and highly compensated employees of Western Union the opportunity to defer a portion of their cash compensation. The SISP is intended to provide participants with an opportunity to supplement their retirement income through deferral of current compensation. The SISP was spun off from the First Data Corporation Supplemental Incentive Savings Plan-2. The SISP is subject to and is intended to comply with Section 409A of the Internal Revenue Code of 1986. A copy of the SISP is filed as Exhibit 10.16 to this Current Report on Form 8-K and incorporated herein by reference thereto.

Grandfathered SISP

The Grandfathered Plan also provides a select group of senior management and highly compensated employees of Western Union the opportunity to defer a portion of their cash compensation. The Grandfathered SISP is intended to provide participants with an opportunity to supplement their retirement income through deferral of current compensation. The Grandfathered SISP was spun off from the First Data Corporation Supplemental Incentive Savings Plan-1. Unlike the SISP, the Grandfathered SISP is not subject to Section 409A of the Internal Revenue Code of 1986. A copy of the Grandfathered SISP is attached hereto as Exhibit 10.17 and incorporated herein by reference into this Item 1.01.

Non-Employee Director Compensation Program

On the Distribution Date, prior to the Distribution, the compensation and benefits committee of Western Union’s Board of Directors (the “Compensation Committee”) recommended, and the Board of Directors (the “Board”) approved, the following cash compensation to be paid to non-employee directors of Western Union: (i) an annual retainer fee of $70,000; (ii) an annual retainer fee of $15,000 for the chairperson of each committee of the Board other than the audit committee; and (iii) an annual retainer fee of $25,000 for the chairperson of the audit committee and $10,000 for each other member of the audit committee; provided that the Compensation Committee recommended, and the Board approved, that the initial cash retainer fees paid to non-employee directors equal 125% of the normal annual levels in order to cover the period beginning with the spin-off through the end of 2007.

The Compensation Committee also recommended, and the Board approved, the following equity compensation to be granted to non-employee directors of Western Union: (i) an annual grant of options to purchase shares of Western Union common stock with a value of $75,000; (ii) an annual grant of fully vested stock units with a value of $25,000; and (iii) a grant of options to purchase shares of Western Union’s common stock with a value of $75,000 and fully vested stock units with a value of $25,000 upon initially becoming a director and three years after initially becoming a director, if they are still a director at that time (the “service grants”); provided that the Compensation Committee recommended, and the Board approved, that the initial annual equity grants (but not the service grants) to non-employee directors equal 125% of the normal annual levels in order to cover the period beginning with the spin-off through the end of 2007.

 

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In lieu of the compensation outlined above for other outside directors, the Compensation Committee recommended, and the Board approved, the following compensation for Western Union’s Non-Executive Chairman: (i) an annual retainer fee of $100,000; (ii) an annual grant of options to purchase shares of Western Union common stock with a value of $262,500; (iii) an annual grant of fully vested stock units with a value of $87,500; and (iv) a grant of options to purchase shares of Western Union common stock with a value of $75,000 and fully vested stock units with a value of $25,000 upon initially becoming Western Union’s Non-Executive Chairman and every three years thereafter (the “service grant”); provided that the Compensation Committee recommended, and the Board approved, that the initial cash retainer fee and the initial annual equity grant (but not the service grant) to the Non-Executive Chairman equal 125% of the normal annual levels in order to cover the period beginning with the spin-off through the end of 2007.

Equity Grants to Non-Employee Directors

In connection with the non-employee director compensation program described above, on the Distribution Date, prior to the Distribution, the Compensation Committee approved the grant of nonqualified stock options and unrestricted stock units under the 2006 Director’s Plan to the non-employee directors of Western Union as follows:

 

Director

   Stock Options    Unrestricted Stock Units

Jack M. Greenberg

   62,659    8,659

Dinyar S. Devitre

   21,281    9,149

Betsy D. Holden

   21,281    7,515

Alan J. Lacy

   21,281    9,149

Linda Fayne Levinson

   21,281    2,941

Roberto Mendoza

   30,739    4,248

Michael A. Miles

   21,281    7,515

Dennis Stevenson

   29,557    4,085

All nonqualified stock option grants have ten year terms and are fully vested at the date of grant. All unrestricted stock unit awards are to be settled in shares of Western Union common stock.

With respect to Mr. Stevenson, who is a taxpayer of the United Kingdom, the Compensation Committee required that he receive a grant of nonqualified stock options and unrestricted stock units in lieu of receiving his annual retainer fees. Consistent with the Deferred Compensation Plan, the other directors had the option to receive their annual retainers in the form of cash or equity. The nonqualified stock option grants have ten year terms and are fully vested at the date of grant. In addition, all stock units awarded to directors (whether in lieu of their annual retainer fees, as part of their service grants or as part of their annual equity grants) will be settled in shares of Western Union common stock on the first business day in the month of January in the calendar year following the calendar year in which such individuals are no longer directors.

Multi-Year Equity Grants

On the Distribution Date, prior to the Distribution, the Compensation Committee granted equity awards to Western Union’s executive officers, including the following equity awards to the named executive officers:

 

Named Executive Officer

   Stock Options    Restricted Stock    Restricted Stock Units

Christina A. Gold

   957,598    132,319    —  

Guy A. Battista

   167,649    23,166    —  

William D. Thomas

   239,968    33,159    —  

Hikmet Ersek

   276,127    —      38,155

Ian Marsh

   157,787    —      21,803

All nonqualified stock option grants have ten year terms and are subject to four year graded vesting schedules (25% vesting each year for four years), subject to the terms and conditions of the 2006 LTIP and the Severance Plan. All restricted stock awards

 

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(or restricted stock unit awards, in the case of an executive officer whose primary work location is outside the U.S.) are subject to three year cliff vesting schedules (no vesting during first three years, after which the awards are 100% vested), subject to the terms and conditions of the 2006 LTIP and the Severance Plan. All restricted stock unit awards are to be settled in shares of Western Union common stock. These awards were in an amount equal to 225% of the recommended annual target dollar value to be received by each executive officer in order to cover the period beginning with the spin-off through the end of 2008.

Spin-off Related Equity Adjustments

Grant of Substitute Stock Options

In accordance with Section 5.01(b) of the Employee Matters Agreement, on the Distribution Date the Compensation Committee approved the grant of substitute options to purchase Western Union common stock under the 2006 LTIP or the 2006 Director’s Plan to each person who became an employee or director of Western Union immediately after the spin-off, including executive officers, and who held an outstanding option to purchase First Data common stock immediately prior to the spin-off.

Grant of Substitute Restricted Stock

In accordance with Section 5.02 of the Employee Matters Agreement, on the Distribution Date the Compensation Committee approved the grant of substitute restricted stock awards under the 2006 LTIP or the 2006 Director’s Plan to each person who became an employee or director of Western Union immediately after the spin-off, including executive officers, and who held an outstanding First Data restricted stock award immediately prior to the spin-off.

Grant of Substitute Restricted Stock Units

In accordance with Section 5.03 of the Employee Matters Agreement, on the Distribution Date the Compensation Committee approved the grant of substitute restricted stock unit awards under the 2006 LTIP or the 2006 Director’s Plan to each person who became an employee or director of Western Union immediately after the spin-off, including executive officers, and who held an outstanding First Data restricted stock unit award immediately prior to the spin-off.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 2.01.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Revolving Credit Agreement

The information included in Item 1.01 of this Current Report on Form 8-K under the caption “Revolving Credit Agreement” is incorporated by reference into this Item 2.03.

On the Distribution Date, FFMC also agreed to fully and unconditionally guarantee (the “Subsidiary Guaranty”) the obligations of Western Union under the Revolving Credit Agreement. A copy of the Subsidiary Guaranty is attached hereto as Exhibit 10.6.1 and incorporated herein by reference into this Item 2.03.

FFMC Promissory Note

On September 27, 2006, FFMC declared and paid to First Data, as its sole stockholder, a dividend in the form of a promissory note in an aggregate principal amount of approximately $2.4 billion. The promissory note bore interest at 5.31375% per year and was payable upon demand at any time after September 29, 2006. On the

 

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Distribution Date, following the Distribution, FFMC borrowed $2.4 billion under the FFMC Bridge Loan and used the proceeds to repay the promissory note.

 

Item 3.03. Material Modification to Rights of Security Holders.

On the Distribution Date, prior to the Distribution, Western Union amended and restated its certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and by-laws (the “Amended and Restated By-laws”). A description of the material provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws is included in the information statement filed as an exhibit to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission. Copies of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated herein by reference into this Item 3.03.

 

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Election of Directors

On the Distribution Date, prior to the Distribution, the following persons were elected to Western Union’s Board of Directors (the “Board”) for a term expiring at the annual meeting of the stockholders of Western Union in the year set forth beside each such person’s name:

Christina A. Gold – 2007

Jack M. Greenberg – 2008

Dinyar S. Devitre – 2007

Betsy D. Holden – 2007

Alan J. Lacy – 2008

Linda Fayne Levinson – 2008

Roberto G. Mendoza – 2009

Michael A. Miles – 2009

Dennis Stevenson – 2009

There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which such individuals were selected as directors. There are no transactions involving any of the individuals listed above that would be required to be reported under Item 404(a) of Regulation S-K.

Resignation of Director

On the Distribution Date, prior to the Distribution, Scott Scheirman resigned from the Board. Mr. Scheirman remains as Executive Vice President, Chief Financial Officer and co-Principal Financial Officer of Western Union.

Appointment of Committee Members

On the Distribution Date, the Board appointed Mr. Devitre (Chair), Mr. Lacy, Ms. Levinson and Mr. Mendoza as members of the audit committee, Ms. Levinson (Chair), Ms. Holden, Mr. Mendoza and Mr. Stevenson as members of the compensation and benefits committee and Mr. Lacy (Chair), Ms. Holden, Mr. Miles and Mr. Stevenson as members of the corporate governance committee.

Information regarding the directors listed above is contained in the information statement filed as an exhibit to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information included in Item 3.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03.

 

10


Item 8.01. Other Events.

Stock Repurchase Plan

On the Distribution Date, Western Union announced that the Board has authorized the purchase of up to $1 billion of Western Union common stock on the open market through December 31, 2008. A copy of the press release announcing the repurchase plan is attached hereto as Exhibit 99.1 and incorporated by reference into this Item 8.01.

 

Item 9.01. Financial Statements and Other Exhibits.

(d) Exhibits

 

Exhibit

No.

  

Description

  2.1       Separation and Distribution Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
  3.1       Amended and Restated Certificate of Incorporation of The Western Union Company (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (registration no. 333-137665) and incorporated herein by reference thereto).
  3.2       Amended and Restated By-laws of The Western Union Company (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (registration no. 333-137665) and incorporated herein by reference thereto).
10.1       Tax Allocation Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.2       Employee Matters Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.3       Transition Services Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.4       Patent Ownership Agreement and Covenant Not to Sue, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.5       Retail Money Order Issuance and Management Agreement, dated as of August 14, 2006, between Integrated Payment Systems Inc. and Western Union Financial Services Inc.
10.6       Revolving Credit Agreement, dated as of September 27, 2006, among The Western Union Company, the banks named therein, as lenders, Wells Fargo Bank, National Association, as syndication agent, Citibank, N.A., as administrative agent, and Citigroup Global Markets Inc. and Wells Fargo Bank, National Association, as joint lead arrangers and joint book runners.
10.6.1    Subsidiary Guaranty, dated as of September 29, 2006, from First Financial Management Corporation in favor of Citibank, N.A., as agent for the Guaranteed Parties named therein.
10.7       Credit Agreement, dated as of September 27, 2006, among First Financial Management Corporation, the banks named therein, as lenders, Wachovia Bank, National Association, as syndication agent, Morgan Stanley Bank, as documentation agent, Citicorp North America, Inc., as administrative agent, and Citigroup Global Markets Inc., Wachovia Capital Markets, LLC and Morgan Stanley Bank, as lead arrangers and book runners.

 

11


10.8       Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form 10 (file no. 001-32903) and incorporated herein by reference thereto).
10.9       Letter Agreement, dated July 12, 2006, between The Western Union Company and David G. Barnes.
10.10     Employment Agreement, dated as of September 30, 2006, by and between Western Union LLC, The Western Union Company and Scott T. Scheirman.
10.11     The Western Union Company 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).
10.12     The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).
10.13     The Western Union Company Non-Employee Director Deferred Compensation Plan.
10.14     The Western Union Company Severance/Change in Control Policy.
10.15     The Western Union Company Senior Executive Incentive Plan.
10.16     The Western Union Company Supplemental Incentive Savings Plan (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).
10.17     The Western Union Company Grandfathered Supplemental Incentive Savings Plan.
99.1       Press Release dated September 29, 2006.

 

12


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    THE WESTERN UNION COMPANY
 

Dated: October 3, 2006.

   

By:

 

/s/ Sarah J. Kilgore

       

Name:

 

Sarah J. Kilgore

       

Title:

 

Vice President and Assistant Secretary

 

13


EXHIBIT INDEX

 

Exhibit
No.
  

Description

  2.1       Separation and Distribution Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
  3.1       Amended and Restated Certificate of Incorporation of The Western Union Company (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (registration no. 333-137665) and incorporated herein by reference thereto).
  3.2       Amended and Restated By-laws of The Western Union Company (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (registration no. 333-137665) and incorporated herein by reference thereto).
10.1       Tax Allocation Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.2       Employee Matters Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.3       Transition Services Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.4       Patent Ownership Agreement and Covenant Not to Sue, dated as of September 29, 2006, between First Data Corporation and The Western Union Company.
10.5       Retail Money Order Issuance and Management Agreement, dated as of August 14, 2006, between Integrated Payment Systems Inc. and Western Union Financial Services Inc.
10.6       Revolving Credit Agreement, dated as of September 27, 2006, among The Western Union Company, the banks named therein, as lenders, Wells Fargo Bank, National Association, as syndication agent, Citibank, N.A., as administrative agent, and Citigroup Global Markets Inc. and Wells Fargo Bank, National Association, as joint lead arrangers and joint book runners.
10.6.1    Subsidiary Guaranty, dated as of September 29, 2006, from First Financial Management Corporation in favor of Citibank, N.A., as agent for the Guaranteed Parties named therein.
10.7       Credit Agreement, dated as of September 27, 2006, among First Financial Management Corporation, the banks named therein, as lenders, Wachovia Bank, National Association, as syndication agent, Morgan Stanley Bank, as documentation agent, Citicorp North America, Inc., as administrative agent, and Citigroup Global Markets Inc., Wachovia Capital Markets, LLC and Morgan Stanley Bank, as lead arrangers and book runners.
10.8       Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form 10 (file no. 001-32903) and incorporated herein by reference thereto).
10.9       Letter Agreement, dated July 12, 2006, between The Western Union Company and David G. Barnes.
10.10     Employment Agreement, dated as of September 30, 2006, by and between Western Union LLC, The Western Union Company and Scott T. Scheirman.
10.11     The Western Union Company 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).

 

14


10.12     The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).
10.13     The Western Union Company Non-Employee Director Deferred Compensation Plan.
10.14     The Western Union Company Severance/Change in Control Policy.
10.15     The Western Union Company Senior Executive Incentive Plan.
10.16     The Western Union Company Supplemental Incentive Savings Plan (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 (file no. 333-137665) and incorporated herein by reference thereto).
10.17     The Western Union Company Grandfathered Supplemental Incentive Savings Plan.
99.1       Press Release dated September 29, 2006.

 

15

Exhibit 2.1

Separation and Distribution Agreement

Dated as of September 29, 2006

Between

First Data Corporation

and

The Western Union Company


TABLE OF CONTENTS

 

     Page

ARTICLE I

DEFINITIONS

  

SECTION 1.1 Definitions

   1

SECTION 1.2 Interpretation

   12

ARTICLE II

ACTIONS PRIOR TO THE DISTRIBUTION DATE

  

SECTION 2.1 SEC and Other Securities Filings; Western Union Note Offering

   13

SECTION 2.2 Financial Instruments

   14

ARTICLE III

BUSINESS SEPARATION

  

SECTION 3.1 Actions Taken Prior to the Distribution Date

   15

SECTION 3.2 Actions Prior to the Separation

   16

SECTION 3.3 The Separation

   17

SECTION 3.4 Termination of Existing Intercompany Agreements

   18

ARTICLE IV

THE DISTRIBUTION

  

SECTION 4.1 Record Date and Distribution Date

   18

SECTION 4.2 Increase In Western Union Authorized Shares

   18

SECTION 4.3 The Agent

   18

SECTION 4.4 Delivery of Western Union Shares

   18

SECTION 4.5 The Distribution

   19

SECTION 4.6 Delivery of Western Union Shares

   19

SECTION 4.7 Distribution is at First Data’s Discretion

   19

SECTION 4.8 Additional Approvals

   19

ARTICLE V

ACTIONS SUBSEQUENT TO THE DISTRIBUTION

  

SECTION 5.1 Actions Following the Distribution

   20

SECTION 5.2 Paydown of First Data Debt

   20

ARTICLE VI

BUSINESS SEPARATION CLOSING MATTERS

  

SECTION 6.1 Delivery of Instruments of Conveyance

   21

SECTION 6.2 Provision of Corporate Records

   21


     Page

ARTICLE VII

NO REPRESENTATIONS AND WARRANTIES

  

SECTION 7.1 No First Data Representations or Warranties

   21

SECTION 7.2 No Western Union Representations or Warranties

   22

ARTICLE VIII

CERTAIN COVENANTS

  

SECTION 8.1 Governmental Approvals and Consents; Third Party Consents

   22

SECTION 8.2 Non-Assignable Contracts

   22

SECTION 8.3 Further Assurances

   24

SECTION 8.4 Receipt of Misdirected Assets

   24

SECTION 8.5 Late Payments

   25

SECTION 8.6 Certain Business Matters

   25

SECTION 8.7 Litigation

   25

SECTION 8.8 Signs; Use of Company Name

   26

SECTION 8.9 Stock Options Registration Statement

   27

ARTICLE IX

CONDITIONS TO THE DISTRIBUTION

  

SECTION 9.1 Conditions to the Distribution

   27

SECTION 9.2 First Data Right Not to Close or to Terminate

   29

ARTICLE X

INSURANCE MATTERS

  

SECTION 10.1 Insurance Prior to the Distribution Date

   29

SECTION 10.2 Ownership of Existing Policies and Programs

   30

SECTION 10.3 Maintenance of Insurance for Western Union

   30

SECTION 10.4 Acquisition and Maintenance of Post-Distribution Insurance by Western Union

   30

SECTION 10.5 Rights Under Shared Policies

   30

SECTION 10.6 Administration and Reserves

   32

SECTION 10.7 Insurance Premiums

   32

SECTION 10.8 Agreement for Waiver of Conflict and Shared Defense

   32

SECTION 10.9 Duty to Mitigate Settlements

   33

SECTION 10.10 Non-Waiver of Rights to Coverage

   33

ARTICLE XI

EXPENSES

  

SECTION 11.1 Expenses Incurred On or Prior To the Distribution Date

   33

SECTION 11.2 Expenses Incurred or Accrued After the Distribution Date

   33

 

ii


     Page

ARTICLE XII

INDEMNIFICATION

  

SECTION 12.1 Release of Pre-Distribution Claims

   34

SECTION 12.2 Indemnification by Western Union

   35

SECTION 12.3 Indemnification by First Data

   36

SECTION 12.4 Applicability of and Limitation on Indemnification

   38

SECTION 12.5 Adjustment of Indemnifiable Losses

   38

SECTION 12.6 Procedures for Indemnification of Third Party Claims

   39

SECTION 12.7 Procedures for Indemnification of Direct Claims

   41

SECTION 12.8 Contribution

   41

SECTION 12.9 Remedies Cumulative

   42

SECTION 12.10 Survival

   42

ARTICLE XIII

DISPUTE RESOLUTION

  

SECTION 13.1 Agreement to Arbitrate

   42

SECTION 13.2 Escalation and Mediation

   42

SECTION 13.3 Procedures for Arbitration

   43

SECTION 13.4 Selection of Arbitrator(s)

   44

SECTION 13.5 Hearings

   44

SECTION 13.6 Discovery and Certain Other Matters

   44

SECTION 13.7 Certain Additional Matters

   45

SECTION 13.8 Continuity of Service and Performance

   46

SECTION 13.9 Law Governing Arbitration Procedures

   46

SECTION 13.10 Choice of Forum

   46

ARTICLE XIV

ACCESS TO INFORMATION AND SERVICES

  

SECTION 14.1 Agreement for Exchange of Information

   46

SECTION 14.2 Ownership of Information

   47

SECTION 14.3 Compensation for Providing Information

   47

SECTION 14.4 Retention of Records

   47

SECTION 14.5 Limitation of Liability

   48

SECTION 14.6 Production of Witnesses

   48

SECTION 14.7 Sharing of Knowledge

   48

SECTION 14.8 Confidentiality

   49

SECTION 14.9 Privileged Matters

   52

SECTION 14.10 Attorney Representation

   53

SECTION 14.11 Financial Information Certifications

   53

ARTICLE XV

MISCELLANEOUS

  

SECTION 15.1 Entire Agreement

   54

 

iii


     Page

SECTION 15.2 Choice of Law

   54

SECTION 15.3 Amendment

   54

SECTION 15.4 Waiver

   54

SECTION 15.5 Partial Invalidity

   54

SECTION 15.6 Execution in Counterparts

   54

SECTION 15.7 Successors and Assigns

   55

SECTION 15.8 Third Party Beneficiaries

   55

SECTION 15.9 Notices

   55

SECTION 15.10 Performance

   55

SECTION 15.11 Force Majeure

   56

SECTION 15.12 No Public Announcement

   56

SECTION 15.13 Termination

   56

SECTION 15.14 Limited Liability

   56

SECTION 15.15 Mutual Drafting

   56

 

iv


EXHIBITS

 

Exhibit A    Form of Employee Matters Agreement
Exhibit B    First Data Balance Sheet
Exhibit C    Form of Management Agreement
Exhibit D    Form of Patent Ownership Agreement
Exhibit E    Form of Tax Allocation Agreement
Exhibit F    Form of Transferred Action Assignment and Assumption Agreement
Exhibit G    Form of Transition Services Agreement
Exhibit H    Form of Western Union Amended and Restated Certificate of Incorporation
Exhibit I    Western Union Balance Sheet


SCHEDULES

 

Schedule 1.1(A)    Commercial Agreements
Schedule 1.1(B)    First Data Financial Instruments
Schedule 1.1(C)    First Data Former Business
Schedule 1.1(D)    Asset Transfer Agreements
Schedule 1.1(E)    Historic First Data Long-Term Debt
Schedule 1.1(F)    Transferred Business Assets
Schedule 1.1(G)    Transferred First Data Business Assets
Schedule 1.1(H)    Western Union Financial Instruments
Schedule 1.1 (I)    Western Union Former Businesses
Schedule 3.3(D)    Western Union Board of Directors
Schedule 3.4    Intercompany Agreements
Schedule 6.1    Certain Conveyancing Instruments
Schedule 8.7(A)    Assumed Actions
Schedule 8.7(B)    Transferred Actions
Schedule 8.7(C)    Certain Actions
Schedule 11.1(A)    Separation Costs
Schedule 11.1(B)    First Data Separation Costs
Schedule 11.1(C)    Western Union Separation Costs
Schedule 12.1(A)    Claims Not Released
Schedule 12.1(B)    Obligations Not Released
Schedule 12.3(D)    First Data Information in Form 10 Registration Statement or Information Statement or Prospectus
Schedule 12.3(E)    First Data Information in Note Offering Memorandum or Prospectus
Schedule 12.3(F)    First Data Information in Stock Options Registration Statement or Prospectus


SEPARATION AND DISTRIBUTION AGREEMENT

THIS SEPARATION AND DISTRIBUTION AGREEMENT is made as of September 29, 2006 between First Data Corporation, a Delaware corporation (“ First Data ”), and The Western Union Company, a Delaware corporation (“ Western Union ”), and, as of the date hereof, a wholly-owned subsidiary of First Data.

WHEREAS, First Data, through the Western Union Subsidiaries (as hereinafter defined), is engaged in the business of providing consumer to consumer money transfer services, consumer to business payment services, retail money order services and certain prepaid services (the “ Transferred Business ”);

WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to transfer to Western Union (i) the Western Union Subsidiaries and (ii) the Transferred Business Assets (as hereinafter defined);

WHEREAS, in connection with the Contribution (as defined herein), First Data has agreed to transfer, or cause to be transferred, to Western Union such Western Union Subsidiaries and the Transferred Business Assets;

WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to distribute on a pro rata basis to the holders of First Data’s common stock, $0.01 par value per share (“ First Data Common Stock ”), without any consideration being paid by the holders of such First Data Common Stock, all of the outstanding shares of Western Union common stock, $0.01 par value per share (“ Western Union Common Stock ”), owned by First Data as of the Distribution Date (as defined herein);

WHEREAS, for federal income tax purposes, the Contribution and Distribution (as defined herein) are intended to qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and this Agreement is intended to be the “plan of reorganization” with respect thereto; and

WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Contribution and Distribution and certain other agreements that will govern the relationship of First Data and Western Union following the Distribution.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1 :

Action ” means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court, grand jury or Governmental Authority.


Affiliate ” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person. After the Distribution, Western Union and First Data shall not be deemed to be under common Control for purposes hereof due solely to the fact that Western Union and First Data have common stockholders.

Agent ” means Wells Fargo Bank, National Association, the distribution agent appointed by First Data to distribute shares of Western Union Common Stock pursuant to the Distribution.

Agreement ” means this Separation and Distribution Agreement, as the same may be amended from time to time.

Applicable Deadline ” has the meaning set forth in Section 13.3(b) .

Arbitration Act ” means the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.

Arbitration Demand Notice ” has the meaning set forth in Section 13.3(a) .

Asset Transfer Agreements ” means the agreements listed on Schedule 1.1 (D)  pursuant to which certain assets related to the Transferred Business will or have been transferred or licensed by the applicable First Data Party to the applicable Western Union Party, or by the applicable Western Union Party to the applicable First Data Party.

Assumed Actions ” has the meaning set forth in Section 8.7(a).

Cash Consideration ” has the meaning set forth in Section 3.3(a) .

CESI Holdings ” means CESI Holdings, Inc., a Delaware corporation.

Claims Administration ” means the processing of claims made under First Data Policies, including the reporting of claims to the insurance carrier, management and defense of claims, and providing for appropriate releases upon settlement of claims.

Claims Made Policies ” has the meaning set forth in Section 10.5(a) .

Code ” has the meaning set forth in the Recitals.

Commercial Agreements ” means the agreements entered into on or before the Distribution Date regarding the ongoing business and service relationships between the First Data Parties and the Western Union Parties identified on Schedule 1.1(A) .

Confidential Information ” means any of the following:

 

  (a)

any information that is competitively sensitive material or otherwise of value to First Data, Western Union and its or their Subsidiaries and/or Affiliates and not generally known to the public, including, but not limited to, product planning

 

2


 

information, marketing strategies, plans, finance, operations, consumer and/or customer relationships, consumer and/or customer profiles, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of First Data, Western Union and its and their Subsidiaries and/or Affiliates and the consumers, customers, clients and suppliers of any of the foregoing;

 

  (b) Confidential Personal Information;

 

  (c) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords First Data, Western Union and its and their Subsidiaries and/or Affiliates a competitive advantage over its competitors; and

 

  (d) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, information, and trade secrets, whether or not patentable or copyrightable.

Confidential Information includes without limitation, all documents, inventions, substances, engineering and laboratory notebooks, drawings, diagrams, computer programs and data, specifications, bills of material, equipment, prototypes and models, and any other tangible manifestation (including data in computer or other digital format) of the foregoing.

Confidential Personal Information ” shall mean any information about identifiable individuals (including, without limitation, identifiable consumers or employees or other personnel) which First Data, Western Union and its and their Subsidiaries and/or Affiliates provides access or transfers to the other hereunder or which the other otherwise collects, uses, discloses, processes or otherwise handles in connection with this Agreement or any Transaction Agreement including (without limitation) any (A) information: (i) a consumer provides to First Data, Western Union, its or their Subsidiaries and/or Affiliates and/or its or their employees, agents or contractors to obtain a financial product or service; (ii) about a consumer resulting from any transaction involving a financial product or service between First Data, Western Union, its or their Subsidiaries and/or Affiliates, its or their employees, agents or contractors and a consumer; or (iii) First Data, Western Union, its or their Subsidiaries and/or Affiliates and its or their employees, agents or contractors otherwise obtain about a consumer (directly or indirectly) in connection with providing a financial product or service to that consumer; (B) list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any information of the type described in subsection (A) hereof; and (C) employment and personnel records and related information of First Data, Western Union and its or their Subsidiaries and Affiliates.

Consideration ” has the meaning set forth in Section 3.3(a) .

Contract ” means any written or oral agreement, undertaking, contract, commitment, lease, license, permit, franchise, concession, deed of trust, contract, note, bond, mortgage, indenture, arrangement or other instrument or obligation.

 

3


Contribution ” has the meaning set forth in Section 3.3(a) .

Control ” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.

Conveyancing Instruments ” has the meaning set forth in Section 6.1 .

Debt Exchange ” has the meaning set forth in Section 3.1(a) .

Distributed Companies ” means FDCS Holdings, CESI Holdings, TeleCheck, EBP Re, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, First Data Canada Limited and their respective Subsidiaries (including those formed or acquired after the date hereof).

Distribution ” has the meaning set forth in Section 4.5(a) .

Distribution Date ” means September 29, 2006.

Distribution Ratio ” has the meaning set forth in Section 4.5(a) .

ECG ” means E Commerce Group, Inc., a New York corporation.

Effective Time ” means the time at which the Distribution occurs on the Distribution Date.

Eligible First Data Debt ” means principal and interest on (a) all or a portion of the outstanding Historic First Data Long-Term Debt (as reduced by the amount of Refinancing Commercial Paper) and/or (b) First Data Commercial Paper outstanding on the Distribution Date up to an amount equal to the sum of (i) $700 million plus (ii) the amount of Refinancing Commercial Paper.

Employee Contract ” means any written agreement or contract between a Party and a current or former employee of any Party.

Employee Matters Agreement ” means the Employee Matters Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit A .

Escalation Notice ” has the meaning set forth in Section 13.2(a) .

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Exchange Agreement ” has the meaning set forth in Section 3.1(a) .

Exchange Banks ” has the meaning set forth in Section 3.1(a) .

Expenses ” means any and all 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,

 

4


and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).

FDCS Holdings ” means First Data Commercial Services Holdings, Inc., a Delaware corporation.

FDR ” means First Data Resources Inc., a Delaware corporation.

FFMC ” means First Financial Management Corporation, a Georgia corporation.

FFMC Note ” has the meaning set forth in Section 3.1(c) .

FIFO Basis ” means, with respect to the payment of Unrelated Claims pursuant to the same Shared Policy, the payment in full of each successful claim (regardless of whether a First Data Insured Party or a Western Union Insured Party is the claimant) in the order in which such successful claim is approved by the insurance carrier, until the limit of the applicable Shared Policy is met.

First Data ” has the meaning set forth in the first paragraph of this Agreement.

First Data Balance Sheet ” means the unaudited consolidated balance sheet of First Data as of June 30, 2006 attached hereto as Exhibit B.

First Data Business ” means (a) all businesses and operations of the First Data Parties, other than the Western Union Business, and (b) the First Data Former Businesses.

First Data Commercial Paper ” means First Data commercial paper and First Data Extendible Commercial Notes.

First Data Common Stock ” has the meaning set forth in the Recitals.

First Data Extendible Commercial Notes ” means unsecured notes of First Data issued at a discount having an initial redemption date not more than 90 days from the date of issue and a final maturity date of up to 390 days from the date of issue.

First Data Financial Instruments ” means all credit facilities, guaranties, foreign currency forward exchange contracts, letters of credit and similar instruments primarily related to the First Data Business under which any Western Union Party has any primary, secondary, contingent, joint, several or other Liability, including those set forth on Schedule 1.1(B) .

First Data Former Business ” means the Former Businesses set forth on Schedule 1.1(C) and any Former Business (other than the Western Union Parties, the Transferred Business and the Former Businesses identified on Schedule 1.1(I) ) owned by, in whole or in part, and/or operated by, in whole or in part, any of the First Data Parties.

First Data Indemnified Parties ” has the meaning set forth in Section 12.2 .

 

5


First Data Insured Party ” means any First Data Party that is a named insured, additional named insured or insured under any Shared Policy.

First Data Intercompany Notes Payable ” means the payables of the type reflected on the historical portion of the Western Union Balance Sheet as “Notes receivable from affiliated companies” (which, as of June 30, 2006, was in the amount of approximately $778.8 million) owed by one or more First Data Parties to one or more Western Union Subsidiaries incurred at any time prior to the Effective Time; it being understood that to the extent the amount of any balance included on the Western Union Balance Sheet was an estimate thereof, or is estimated as of a particular date or time, the actual amount of such balance (rather than the estimated amount) shall be deemed to be the balance used in determination of the First Data Intercompany Notes Payable.

First Data Liabilities ” means, without duplication, (a) all Liabilities of the First Data Parties to the extent based upon or arising out of the First Data Business and the Transferred First Data Business Assets, (b) all Liabilities of the Western Union Parties to the extent based upon or arising out of the First Data Business the Transferred First Data Business Assets, (c) all Liabilities based upon or arising out of the First Data Financial Instruments, (d) all outstanding Liabilities (other than the Western Union Liabilities) included on the First Data Balance Sheet and the notes thereto and all other Liabilities (other than the Western Union Liabilities) that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a consolidated balance sheet of First Data, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of the nature and type of Liabilities included on the First Data Balance Sheet; it being understood that to the extent the amount of any Liability included on the First Data Balance Sheet or the notes thereto was an estimate thereof, the actual amount of such Liability (rather than the estimated amount) shall be deemed to be a First Data Liability for purposes of clause (d).

First Data Net Intercompany Payable ” means the payables of the type reflected on the historical portion of the Western Union Balance Sheet as “Receivables from affiliated companies, net” (which, as of June 30, 2006, was in the amount of approximately $167.2 million) owed by one or more First Data Parties to one or more Western Union Parties incurred at any time prior to the Effective Time; it being understood that to the extent the amount of any balance included on the Western Union Balance Sheet was an estimate thereof, or is estimated as of a particular date or time, the actual amount of such balance (rather than the estimated amount) shall be deemed to be the balance used in determination of the First Data Net Intercompany Payable.

First Data Parties ” means First Data and its Subsidiaries (including those formed or acquired after the date hereof), other than the Western Union Parties.

First Data Policies ” has the meaning set forth in Section 10.2(a) .

Foreign Exchange Rate ” means, with respect to any currency other than United States dollars, as of any date of determination, the rate set forth in the exchange rate section of The Wall Street Journal or, if not published in The Wall Street Journal , then the average of the opening bid and asked rates on such date at which such currency may be exchanged for United States

 

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dollars as quoted by JPMorgan Chase Bank (or any successor thereto or other major money center commercial bank agreed to by the Parties hereto).

Form 10 Registration Statement ” has the meaning set forth in Section 2.1(a).

Former Business ” means any corporation, partnership, entity, division, business unit or business within the definition of Rule 11-01(d) of Regulation S-X (in each case, including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part).

GMT ” means GMT Group, Inc., a Delaware corporation.

Governmental Approvals and Consents ” means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.

Governmental Authority ” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.

Historic First Data Long-Term Debt ” means those certain First Data long-term notes issued prior to January 1, 2006 and set forth on Schedule 1.1(E) .

Indemnified Party ” has the meaning set forth in Section 12.5(a) .

Indemnifying Party ” has the meaning set forth in Section 12.5(a) .

Indemnity Payment ” has the meaning set forth in Section 12.5(a) .

Information ” has the meaning set forth in Section 14.1(a) .

Information Statement ” has the meaning set forth in Section 2.1(a) .

Insured Party ” means a First Data Insured Party or a Western Union Insured Party.

Intercompany Agreements ” means any Contract, other than this Agreement and the Operating Agreements, between one or more of the First Data Parties, on the one hand, and one or more of the Western Union Parties, on the other hand, entered into prior to the Distribution.

Internal Distribution ” has the meaning set forth in Section 3.1(e) .

IPS ” means Integrated Payment Systems Inc., a Delaware corporation.

IRS ” means the Internal Revenue Service.

Liabilities ” means any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,

 

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whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.

Losses ” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges.

Management Agreement ” means the Retail Money Order Issuance and Management Services Agreement, dated August 14, 2006, between IPS and WUFSI, the form of which is attached hereto as Exhibit C .

Merchant Alliance ” means any joint venture (in any form, including in corporate, partnership or limited liability company form) or contractual alliance now or hereafter entered into between a First Data Party and one or more financial institutions or other Persons for the provision of merchant processing services.

Merchant Alliance Agreement ” means any contract or agreement between a Western Union Party and a Merchant Alliance.

Note Offering ” means the offering under the Note Offering Memorandum of the Western Union Notes.

Note Offering Memorandum ” means the Preliminary Offering Memorandum and the Final Offering Memorandum with respect to the offering and sale of the Western Union Notes.

NYSE ” means the New York Stock Exchange, Inc.

Occurrence Based Policies ” has the meaning set forth in Section 10.5(a) .

Operating Agreements ” means the Transaction Agreements and the Commercial Agreements.

Out-of-Pocket Expenses ” means expenses involving a payment to a Third Party (other than an employee of the party making the payment).

Party ” means a First Data Party or a Western Union Party, as applicable.

Patent Ownership Agreement ” means the Patent Ownership Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit D .

Paymap ” means Paymap Inc., a Delaware corporation.

Person ” means any individual, corporation, partnership, joint venture, limited liability company, entity, association, joint-stock company, trust, unincorporated organization or Governmental Authority.

 

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Personal Information Incident ” shall mean any actual or threatened unauthorized access, acquisition, use, alteration, creation, destruction, loss, theft, copying or disclosure of Confidential Personal Information, including but not limited to user IDs or passwords, regardless of whether such has been encrypted. Personal Information Incidents shall exclude the following to the extent occurring in the normal course of business and not reasonably likely to result in harm to a consumer or customer or misuse of Confidential Personal Information: (a) data input errors that are immediately rectified; and (b) any authorized access, acquisition, use, alteration, creation, destruction, copying or disclosure of Confidential Personal Information.

Prime Rate ” means the rate that JPMorgan Chase Bank (or any successor thereto or other major money center commercial bank agreed to by the Parties hereto) announces from time to time as its prime lending rate, as in effect from time to time.

Privilege ” has the meaning set forth in Section 14.9(a) .

Privileged Information ” has the meaning set forth in Section 14.9(a) .

Record Date ” means September 22, 2006.

Refinancing Commercial Paper ” means First Data Commercial Paper outstanding on the Distribution Date having a stated principal amount equal to the amount of First Data Commercial Paper proceeds used to pay principal and/or interest on Historic First Data Long-Term Debt.

Related Claims ” means a claim or claims against a Shared Policy made by one or more Western Union Insured Parties, on the one hand, and one or more First Data Insured Parties, on the other hand, filed in connection with Losses suffered by either a Western Union Insured Party or a First Data Insured Party, as the case may be, arising out of the same underlying transaction or series of transactions or event or series of events that have also given rise to Losses suffered by a First Data Insured Party or a Western Union Insured Party, as the case may be, which Losses are the subject of a claim or claims by such Person against a Shared Policy.

SEC ” means the United States Securities and Exchange Commission.

Securities Act ” means the Securities Act of 1933, as amended.

Shared Policies ” has the meaning set forth in Section 10.5(a) .

Stock Options Registration Statement ” means the Registration Statement on Form S-1, as amended and supplemented, including all documents incorporated by reference, to effect the registration under the Securities Act of shares of Western Union Common Stock subject to certain stock options granted to current and former officers, employees, directors and consultants of the First Data Parties pursuant to the Employee Matters Agreement.

Subsidiary ” means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or

 

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other organization is directly or indirectly owned or Controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that Person. After the Distribution, First Data and Western Union shall not be deemed to be under common Control for purposes hereof due solely to the fact that First Data and Western Union have common stockholders.

Tax Allocation Agreement ” means the Tax Allocation Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit E .

TeleCheck ” means TeleCheck International, Inc., a Georgia corporation.

Third Party ” means a Person that is not an Affiliate of any Party hereto.

Third Party Claim ” has the meaning set forth in Section 12.6(a).

Third Party Consents ” means any material consent, approval or authorization to be obtained from any Person that is not a Governmental Authority.

Transaction Agreements ” means the Employee Matters Agreement, the Management Agreement, the Patent Ownership Agreement, the Tax Allocation Agreement, the Transition Services Agreement, the Transferred Action Assignment and Assumption Agreement, the Asset Transfer Agreements and the Conveyancing Instruments.

Transferred Action Assignment and Assumption Agreement ” means the Transferred Action Assignment and Assumption Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit F .

Transferred Actions ” has the meaning set forth in Section 8.7(b) .

Transferred Business Assets ” means, collectively, the assets set forth on Schedule 1.1(F) .

Transferred Business ” has the meaning set forth in the Recitals.

Transferred First Data Business Assets ” means, collectively, the assets set forth on Schedule 1.1(G) .

Transition Services Agreement ” means the Transition Services Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit G .

Unrelated Claims ” means a claim or claims against a Shared Policy that is not a Related Claim.

Western Union ” has the meaning set forth in the first paragraph of this Agreement.

 

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Western Union Amended and Restated Certificate of Incorporation ” means the Amended and Restated Certificate of Incorporation of Western Union, the form of which is attached hereto as Exhibit H .

Western Union Balance Sheet ” means the unaudited pro forma combined balance sheet of Western Union as of June 30, 2006 and attached hereto as Exhibit I.

Western Union Business ” means (a) all businesses and operations of the Western Union Parties and (b) the Western Union Former Businesses.

Western Union Common Stock ” has the meaning set forth in the Recitals.

Western Union Credit Facility ” means a $1.5 billion credit facility to be entered into by Western Union.

Western Union Financial Instruments ” means all credit facilities, guaranties, foreign currency forward exchange contracts, letters of credit and similar instruments primarily related to the Western Union Business under which any First Data Party has any primary, secondary, contingent, joint, several or other Liability, including those set forth on Schedule 1.1(H) .

Western Union Former Business ” means the Former Businesses set forth on Schedule 1.1(I) and any Former Business (other than the Former Businesses identified on Schedule 1.1(C) ) owned by, in whole or in part, and/or operated by, in whole or in part, any of the Western Union Parties.

Western Union Indemnified Parties ” has the meaning set forth in Section 12.3.

Western Union Insured Party ” means any Western Union Party that is a named insured, additional named insured or insured under any Shared Policy.

Western Union Intercompany Notes Payable ” means the payables of the type reflected on the historical portion of the Western Union Balance Sheet as “Notes payable to affiliated companies” (excluding an $11.3 million note payable cancelled by a First Data Party on September 26, 2006) (which, as of June 30, 2006, was in the amount of approximately $52.2 million) owed by one or more Western Union Parties to one or more First Data Parties incurred at any time prior to the Effective Time; it being understood that to the extent the amount of any balance included on the Western Union Balance Sheet was an estimate thereof, or is estimated as of a particular date or time, the actual amount of such balance (rather than the estimated amount) shall be deemed to be the balance used in determination of the Western Union Intercompany Notes Payable.

Western Union Liabilities ” means (a) all Liabilities of the Western Union Parties to the extent based upon or arising out of the Western Union Business and the Transferred Business Assets, (b) all Liabilities of the First Data Parties to the extent based upon or arising out of the Western Union Business and the Transferred Business Assets, (c) all Liabilities based upon or arising out of the Western Union Financial Instruments, (d) all outstanding Liabilities included on the Western Union Balance Sheet and the notes thereto and all other Liabilities that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a

 

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consolidated balance sheet of Western Union, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of the nature and type of Liabilities included on the Western Union Balance Sheet; it being understood that to the extent the amount of any Liability included on the Western Union Balance Sheet or the notes thereto was an estimate thereof, the actual amount of such Liability (rather than the estimated amount) shall be deemed to be a Western Union Liability for purposes of clause (d).

Western Union Notes ” means the 5.930% Notes due 2016 of Western Union in the aggregate principal amount of $1,000,000,000, as more fully described in the Note Offering Memorandum.

Western Union Parties ” means Western Union, the Western Union Subsidiaries and any other Subsidiary of Western Union (including those formed or acquired after the date hereof), in each case, other than the Distributed Companies.

Western Union Subsidiaries ” means, collectively, ECG, FFMC, GMT, Paymap, WUSI and each Subsidiary of any of the foregoing other than the Distributed Companies.

Western Union Share ” means a share of Western Union Common Stock.

WUFSI ” means Western Union Financial Services, Inc., a Colorado corporation.

WUSI ” means Western Union Services Inc., a Maryland corporation.

SECTION 1.2 Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:

(i) words used in the singular include the plural and words used in the plural include the singular;

(ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;

(iii) reference to any gender includes the other gender;

(iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;

 

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(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(x) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;

(xi) if there is any conflict between the provisions of the body of this Agreement and the Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(xii) if there is any conflict between the provisions of this Agreement and a Transaction Agreement, the provisions of such Transaction Agreement shall control unless explicitly stated otherwise therein;

(xiii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(xiv) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and

(xv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.

ARTICLE II

ACTIONS PRIOR TO THE DISTRIBUTION DATE

SECTION 2.1 SEC and Other Securities Filings; Western Union Note Offering . In order to effect the transactions contemplated by Articles III and IV , the First Data Parties and the Western Union Parties shall take the following actions prior to the Distribution Date:

(a) Western Union shall file with the SEC (i) a registration statement under the Exchange Act on Form 10 (including all amendments or supplements thereto, in each case prior to the Distribution Date, the “ Form 10 Registration Statement ”) to effect the registration of the Western Union Common Stock under the Exchange Act and (ii) the Stock Options Registration Statement. The Form 10 Registration Statement will include an information statement to be sent

 

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by First Data to its stockholders in connection with the Distribution (as may be amended or supplemented, the “ Information Statement ”). Western Union and First Data shall use their respective commercially reasonable efforts to cause the Form 10 Registration Statement and the Stock Options Registration Statement to become effective as soon as reasonably practicable. As soon as practicable after the Form 10 Registration Statement becomes effective, First Data shall mail the Information Statement to the holders of record of First Data Common Stock.

(b) In connection with the Distribution:

(i) the Parties shall use their respective commercially reasonable efforts to take all such action as may be necessary or appropriate under state and foreign securities and “blue sky” laws in connection with the transactions contemplated by this Agreement;

(ii) the Parties shall prepare, and Western Union shall file and seek to have approved, an application for the listing of the Western Union Common Stock on the NYSE, subject to official notice of issuance;

(iii) First Data shall give the NYSE notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act; and

(iv) the Parties shall cooperate in preparing, filing with the SEC and causing to become effective any other registration statements or amendments or supplements thereto that are necessary or appropriate in order to effect the transactions contemplated hereby, or to reflect the establishment of, or amendments to, any employee benefit plans contemplated hereby.

SECTION 2.2 Financial Instruments.

(a) Western Union will use its commercially reasonable efforts to take or cause to be taken all actions, and enter into (or cause the other Western Union Parties to enter into) such agreements and arrangements, as shall be necessary to cause, as of the Effective Time, (i) the removal of the First Data Parties from all Western Union Financial Instruments and (ii) the First Data Parties to be fully and unconditionally released from all Liabilities in respect of the Western Union Financial Instruments. It is understood and agreed that all Liabilities in respect of the Western Union Financial Instruments are Western Union Liabilities and Western Union shall indemnify the First Data Parties from any Liabilities suffered thereby arising out of, resulting from or relating to the Western Union Financial Instruments. Without limiting the foregoing, after the Effective Time, (A) Western Union will not, and will not permit any Western Union Party to, renew, extend, modify, amend or supplement any Western Union Financial Instrument in any manner that would increase, extend or give rise to any Liability of a First Data Party under such Western Union Financial Instrument and (B) with respect to any Western Union Financial Instrument for which any First Data Party was not removed and fully and unconditionally released from all Liabilities in respect of such Western Union Financial Instrument prior to the Effective Time, Western Union shall continue to use its reasonable best efforts to cause such removal and release.

(b) First Data will use its commercially reasonable efforts to take or cause to be taken all actions, and enter into (or cause the other First Data Parties to enter into) such agreements and arrangements, as shall be necessary to cause, as of the Effective Time, (i) the removal of the

 

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Western Union Parties from all First Data Financial Instruments and (ii) the Western Union Parties to be fully and unconditionally released from all Liabilities in respect of the First Data Financial Instruments. It is understood and agreed that all Liabilities in respect of the First Data Financial Instruments are First Data Liabilities and First Data shall indemnify the Western Union Parties from any Liabilities suffered thereby arising out of, resulting from or relating to the First Data Financial Instruments. Without limiting the foregoing, after the Effective Time, (A) First Data will not, and will not permit any First Data Party to, renew, extend, modify, amend or supplement any First Data Financial Instrument in any manner that would increase, extend or give rise to any Liability of a Western Union Party under such First Data Financial Instrument and (B) with respect to any First Data Financial Instrument for which any Western Union Party was not removed and fully and unconditionally released from all Liabilities in respect of such First Data Financial Instrument prior to the Effective Time, First Data shall continue to use its reasonable best efforts to cause such removal and release.

ARTICLE III

BUSINESS SEPARATION

SECTION 3.1 Actions Taken Prior to the Distribution Date . Prior to the Distribution Date, First Data and Western Union took or caused to be taken the following actions in the following order:

(a) Purchase and Exchange Arrangements . On September 26, 2006, Western Union, Barclays Capital Inc. and J.P. Morgan Securities Inc. (Barclays Capital Inc. and J.P. Morgan Securities Inc., collectively, the “ Exchange Banks ”) entered into a purchase agreement, dated as of September 20, 2006, which established the terms upon which the Western Union Notes will be sold to the purchasers thereof and which provides for a closing date that is the same day as the Distribution Date and at a time following the Effective Time. On September 26, 2006, First Data, Western Union and the Exchange Banks entered into an exchange agreement (“ Exchange Agreement ”) regarding the exchange of Eligible First Data Debt having an aggregate fair market value equal to the amount set forth in the Exchange Agreement (the “ Debt Exchange ”).

(b) FDR Conversion . First Data, on September 25, 2006, caused FDR to file a certificate of conversion with the Secretary of State of the State of Delaware converting FDR from a corporation to a limited liability company, which certificate provided that it is effective at the time of the filing thereof.

(c) Repayment of Western Union Intercompany Notes . On September 26, 2006, one or more Western Union Parties paid to one or more First Data Parties by wire transfer of immediately available funds to an account specified in writing by a First Data Party an amount equal to the Western Union Intercompany Notes Payable in full satisfaction thereof.

(d) Repayment of First Data Intercompany Notes . On September 26, 2006, one or more First Data Parties paid to one or more Western Union Parties by wire transfer of immediately available funds to an account specified in writing by a Western Union Party an amount equal to the First Data Intercompany Notes Payable in full satisfaction thereof.

 

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(e) Asset Transfers . Prior to the close of business on September 27, 2006, the applicable First Data Parties and the applicable Western Union Parties entered into the Asset Transfer Agreements and consummated the transactions contemplated thereby in accordance with their terms.

(f) FFMC Dividend; GMT Contribution . The board of directors of FFMC, on September 27, 2006, in accordance with the articles of incorporation and bylaws of FFMC and the Georgia Business Corporation Code, declared a dividend to First Data, as the sole stockholder of FFMC as of the September 27, 2006 record date of the dividend, in the amount of $2,399,291,710, and caused the dividend amount to be paid to First Data on such record date by execution and delivery of a promissory note (the “ FFMC Note ”). Concurrently with the distribution of the FFMC Note described in this Section 3.1(c) , First Data contributed all of its right, title and interest in and to the issued and outstanding shares of capital stock of GMT to FFMC.

(g) Dividends and Distributions Related to First Data Net Intercompany Payable . The board of directors or other governing body or equity owner of each of substantially all of the Western Union Subsidiaries and the Distributed Companies formed under the laws of the United States, on September 27, 2006, in accordance with the organizational documents of such Persons and the laws of their respective jurisdictions, declared a dividend or distribution to their respective parent companies as of the September 27, 2006 record date of the dividend or distribution, to effectuate, as of the close of business on September 27, 2006, the distribution in cancellation of the First Data Net Intercompany Payable. Immediately following declaration of such dividends and distributions, First Data and each of the applicable Western Union Subsidiaries and Distributed Companies entered into instruments of assignment, contribution and assumption in furtherance of the actions contemplated by the distribution in cancellation of the First Data Net Intercompany Payable as of the close of business on September 27, 2006.

(h) Internal Distribution Declaration . The board of directors of FFMC, on September 28, 2006, in accordance with the articles of incorporation and bylaws of FFMC and the Georgia Business Corporation Code, declared a dividend to First Data, as the sole stockholder of FFMC as of the September 28, 2006 record date of the dividend, of all of FFMC’s right, title and interest in and to the issued and outstanding shares of capital stock of FDCS Holdings (the “ Internal Distribution ”), such dividend being payable on September 29, 2006.

SECTION 3.2 Actions Prior to the Separation . Subject to the terms and conditions of this Agreement, on the Distribution Date but prior to the Contribution and Distribution, First Data and Western Union shall take or cause to be taken the following actions in the following order:

(a) Dividends and Distributions Related to First Data Net Intercompany Payable . The board of directors or other governing body or equity owner of each of substantially all of the Western Union Subsidiaries and the Distributed Companies formed under the laws of the United States shall, effective as of 5:00 AM (Eastern Time) on the Distribution Date (the “ Intercompany Distribution Time ”), in accordance with the organizational documents of such Persons and the laws of their respective jurisdictions, declared a dividend or distribution to their respective parent companies as of the Intercompany Distribution Time, to effectuate, as of the

 

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Intercompany Distribution Time, the distribution in cancellation of the First Data Net Intercompany Payable as of the close of business on the Distribution Date (after giving effect to the transactions contemplated by Section 5.1(d) ). Immediately following declaration of such dividends and distributions, First Data and each of the applicable Western Union Subsidiaries and Distributed Companies shall enter into instruments of assignment, contribution and assumption in furtherance of the actions contemplated by the distribution in cancellation, as of the Intercompany Distribution Time, of the First Data Net Intercompany Payable as of the close of business on the Distribution Date.

(b) Internal Contribution . First Data shall cause FFMC to contribute all of its right, title and interest in and to the issued and outstanding shares of capital stock and other equity interests of each of CESI, TeleCheck, EBP Re, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, and First Data Canada Limited to FDCS Holdings, and in consideration therefor and simultaneously therewith FDCS Holdings shall issue to FFMC 100 fully paid, nonassessable shares of common stock of FDCS Holdings, which shares shall be free of preemptive rights (the “ Internal Contribution ”).

(c) Internal Distribution . FFMC shall effect the Internal Distribution by distributing to First Data all of FFMC’s right, title and interest in and to the outstanding shares of common stock of FDCS Holdings. For federal income tax purposes, the Internal Contribution and the Internal Distribution are intended to qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code.

(d) Western Union Borrowings . Western Union shall borrow $100 million in principal amount under the Western Union Credit Facility.

SECTION 3.3 The Separation . Subject to the terms and conditions of this Agreement, on the Distribution Date and following the consummation of the transactions to be taken pursuant to Section 3.2 , First Data and Western Union shall take the following actions in the following order:

(a) Western Union Board . The Board of Directors of Western Union shall be reconstituted so that it consists of the persons set forth on Schedule 3.3 .

(b) Western Union Contribution . First Data shall (i) contribute to Western Union all of First Data’s right, title and interest in and to the issued and outstanding shares of capital stock of each of FFMC, ECG, Paymap and WUSI and (ii) contribute to Western Union all of First Data’s right, title and interest in and to the Transferred Business Assets set forth on Schedule 3.3(A) and simultaneously therewith and in consideration therefor Western Union shall (A) pay to First Data by wire transfer of immediately available funds to an account described in Section 5.1(d) and specified in writing by First Data an amount equal to $100 million (the “ Cash Consideration ”), (B) deliver to First Data the Western Union Notes, and (C) deliver to First Data a number of uncertificated Western Union Shares which, together with the Western Union Shares held by First Data, shall equal the number of Western Union Shares to be distributed by First Data in the Distribution, which shares shall be fully paid, nonassessable and free of preemptive rights (the consideration described in clauses (A) , (B)  and (C) , the “ Consideration ”, and the transfers in clauses (i)  and (ii)  and delivery of the Consideration, the “ Contribution ”).

 

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(c) Transaction Agreements . The applicable First Data Parties and the applicable Western Union Parties shall execute and deliver to the other the Transaction Agreements to which they are intended to be a Party.

(d) Commercial Agreements . To the extent not already executed, the applicable First Data Parties and the applicable Western Union Parties shall execute and deliver to the other the Commercial Agreements to which they are intended to be a Party.

Notwithstanding the foregoing, First Data may elect in its sole and absolute discretion at any time prior to the Distribution to omit or modify any of the transactions set forth in Sections 3.2 through 3.3 or to include additional transactions.

SECTION 3.4 Termination of Existing Intercompany Agreements . Except as otherwise provided or contemplated by this Agreement, the Operating Agreements, Merchant Alliance Agreements or as set forth on Schedule 3.4, all Intercompany Agreements and all other intercompany arrangements and course of dealings, whether or not in writing and whether or not binding, in effect immediately prior to the Distribution, shall be terminated and be of no further force and effect from and after the Distribution; provided that, for the avoidance of doubt, this Section 3.4 shall not terminate or affect this Agreement, any Operating Agreement or any Merchant Alliance Agreement. If, as a result of mistake or oversight, any Intercompany Agreement, intercompany arrangement and/or course of dealings is terminated pursuant to this Section 3.4 , then, at the request of First Data or Western Union, the Parties shall negotiate in good faith after the Distribution to determine whether, notwithstanding such termination, such Intercompany Agreement, intercompany arrangement and/or course of dealings should continue following the Effective Time and the terms and conditions upon which the Parties may continue with respect thereto.

ARTICLE IV

THE DISTRIBUTION

SECTION 4.1 Record Date and Distribution Date . Subject to the terms and conditions of this Agreement, the Board of Directors of First Data shall, in its sole and absolute discretion, establish the Record Date and the Distribution Date and any necessary or appropriate procedures in connection with the Distribution. The Board of Directors of First Data shall have the right to adjust the Distribution Ratio at any time prior to the Distribution.

SECTION 4.2 Increase In Western Union Authorized Shares . Prior to the Contribution, the Western Union Board of Directors and First Data, as sole stockholder of Western Union, shall have adopted the Western Union Amended and Restated Certificate of Incorporation and Western Union shall have filed the Western Union Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

SECTION 4.3 The Agent . Prior to the Distribution Date, First Data will enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

SECTION 4.4 Delivery of Western Union Shares . First Data shall take such steps as are necessary or appropriate to permit the Western Union Shares to be distributed in the manner

 

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described in this Article IV. In its capacity as First Data’s distribution agent and Western Union’s transfer agent, the Agent will distribute the Western Union Shares in the manner described in this Article IV.

SECTION 4.5 The Distribution . (a) Subject to the satisfaction or waiver of the conditions set forth in Section 9.1 and at the sole and absolute discretion of First Data, on the Distribution Date First Data shall cause the Agent to distribute to each holder of record of shares of First Data Common Stock as of the Record Date (or, if such holder has sold its shares of First Data Common Stock in the regular way market on or prior to the Distribution Date, to the transferee of such shares) by means of a pro rata dividend of one Western Union Share for each share of First Data Common Stock (the “ Distribution Ratio ”) held of record by such holder (or such transferee) as of the Record Date (the “ Distribution ”).

(b) Subject to the terms and conditions of this Agreement, each holder of record of First Data Common Stock as of the Record Date (or such holder’s designated transferee) will be entitled to receive in the Distribution one share of Western Union Common Stock for each share of First Data Common Stock held of record by such record holder (or such transferee) as of the Record Date.

SECTION 4.6 Delivery of Western Union Shares . Each distributed Western Union Share shall be validly issued, fully paid and nonassessable and free of preemptive rights. The shares of Western Union Common Stock distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system. No certificates therefor shall be distributed. First Data shall cause the Agent to deliver an account statement to each holder of record of Western Union Common Stock reflecting such holder’s ownership interest in shares of Western Union Common Stock.

SECTION 4.7 Distribution is at First Data’s Discretion . The consummation of the transactions provided for in this Article IV shall only be effected after the Distribution has been declared by the Board of Directors of First Data and after all of the conditions set forth in Section 9.1 shall have been satisfied or waived by First Data. Notwithstanding the foregoing, at any time prior to the Distribution, First Data, in its sole and absolute discretion, may determine not to consummate the Distribution.

SECTION 4.8 Additional Approvals . First Data shall cooperate with Western Union in effecting, and if so requested by Western Union, First Data shall, as the sole stockholder of Western Union prior to the Distribution, ratify any actions which are reasonably necessary or desirable to be taken by Western Union to effectuate the transactions referenced in or contemplated by this Agreement in a manner consistent with the terms hereof, including the preparation and implementation of appropriate plans, agreements and arrangements for employees of the Western Union Business and non-employee members of Western Union’s Board of Directors.

 

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ARTICLE V

ACTIONS SUBSEQUENT TO THE DISTRIBUTION

SECTION 5.1 Actions Following the Distribution . On the Distribution Date and promptly following the consummation of the Distribution, the following transactions shall be undertaken:

(a) FFMC Debt Financing. FFMC shall, pursuant to one or more financing agreements previously entered into, borrow a sufficient amount of cash to comply with its obligations pursuant to Section 5.1(b) .

(b) Satisfaction of FFMC Note . FFMC shall pay to First Data by wire transfer of immediately available funds to an account specified in writing by First Data an amount equal to the outstanding principal amount of, and accrued interest on, the FFMC Note in full satisfaction thereof.

(c) Debt Exchange and Note Offering . Pursuant to the Exchange Agreement and subject to the terms thereof, First Data will transfer the Western Union Notes to the Exchange Banks in exchange for all or a portion of the Eligible First Data Debt. First Data and Western Union shall use their respective reasonable best efforts to cause the Debt Exchange and the Note Offering to be consummated on the Distribution Date. Without limiting the generality of the foregoing, each of First Data and Western Union shall use its reasonable best efforts to cause their respective employees, accountants, counsel and other representatives to reasonably cooperate with each other in carrying out the transactions contemplated by the Debt Exchange and the Note Offering and in delivering all documents and instruments deemed reasonably necessary by First Data and Western Union and otherwise cooperating and assisting in satisfying the conditions of the Debt Exchange and the Note Offering.

(d) Intercompany Arrangements on the Distribution Date . During the period beginning at the Effective Time and concluding immediately following the close of business on the Distribution Date, with respect to intercompany arrangements which historically have resulted in the creation of a First Data Net Intercompany Payable, the First Data Parties and the Western Union Parties shall continue such intercompany arrangements in the ordinary course of business consistent with past practice, including the transfer to First Data at the close of business on the Distribution Date of operating cash received by the Western Union Parties on the Distribution Date in excess of amounts, consistent with past practice, which have historically been retained by the applicable Western Union Parties at the close of business. For the purpose of this Agreement and the transactions contemplated by Section 3.2(a) , the intercompany arrangements and resulting accounts arising from this Section 5.2(d) shall be deemed to have taken effect prior to the Contribution and the Intercompany Distribution Time, and the rights of the Parties with respect therein shall be effective and enforceable as of the Intercompany Distribution Time.

SECTION 5.2 Paydown of First Data Debt . First Data agrees (i) subject to the payment of indebtedness of the First Data Parties in accordance with this Section 5.2 , to maintain the Cash Consideration in a separate, interest-bearing account from all other cash and cash equivalents of the First Data Parties, (ii) not to commingle the Cash Consideration with any other

 

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assets owned or held by First Data and (iii) to, not later than one year following the Distribution Date, use all of the Cash Consideration plus all earnings on any amounts held in such account solely to repay Eligible First Data Debt.

ARTICLE VI

BUSINESS SEPARATION CLOSING MATTERS

SECTION 6.1 Delivery of Instruments of Conveyance . In order to effectuate the transactions contemplated by Articles II through IV, the Parties shall execute and deliver, or cause to be executed and delivered, prior to or as of the Distribution Date, such deeds, bills of sale, instruments of assumption, instruments of assignment, stock powers, certificates of title and other instruments of assignment, transfer, assumption, license and conveyance (collectively, the “ Conveyancing Instruments ”) as First Data and Western Union shall reasonably deem necessary or appropriate to effect such transactions, including the Asset Transfer Agreements.

SECTION 6.2 Provision of Corporate Records . (a) Without limitation of the Parties rights and obligations pursuant to Article XIV , prior to or as promptly as reasonably practicable after the Distribution, First Data shall deliver to Western Union all corporate books and records of the Western Union Parties and, upon request, copies of all corporate books and records of the First Data Parties relating to the Western Union Business in its possession or control, including in each case all active agreements, litigation files and government filings.

(b) Without limitation of the Parties rights and obligations pursuant to Article XIV , prior to or as promptly as reasonably practicable after the Distribution, Western Union shall deliver to First Data all corporate books and records of the First Data Parties and, upon request, copies of all corporate books and records of the Western Union Parties relating to the First Data Business in its possession or control, including in each case all active agreements, litigation files and government filings.

ARTICLE VII

NO REPRESENTATIONS AND WARRANTIES

SECTION 7.1 No First Data Representations or Warranties . Except as expressly set forth herein or in any Operating Agreement, none of the First Data Parties represents or warrants in any way (a) as to the value, condition, prospects or freedom from encumbrance of, or any other matter concerning, any of the Western Union Subsidiaries (including their respective assets), the Transferred Business Assets or the Western Union Business, (b) as to the legal sufficiency to convey title to any of the Western Union Subsidiaries or Transferred Business Assets on the execution, delivery and filing of the Conveyancing Instruments or (c) the amount or nature of, or any other matter concerning, the Liabilities of the Western Union Parties. THE WESTERN UNION BUSINESS AND ALL SUCH WESTERN UNION SUBSIDIARIES (AND THEIR RESPECTIVE ASSETS) AND TRANSFERRED BUSINESS ASSETS ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the Western Union Parties shall bear the economic and legal risks that any conveyances of such assets shall

 

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prove to be insufficient or that the Western Union Parties’ title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Operating Agreement, none of the First Data Parties represents or warrants that the obtaining of the consents or approvals, the execution and delivery of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments and, subject to Section 7.2 , the Western Union Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with with respect to the Contribution or the contribution of GMT to FFMC.

SECTION 7.2 No Western Union Representations or Warranties . Except as expressly set forth herein or in any Operating Agreement, none of the Western Union Parties represents or warrants in any way (a) as to the value or freedom from encumbrance of, or any other matter concerning, any of the Distributed Companies (including their respective assets), the Transferred First Data Business Assets or the First Data Business, (b) as to the legal sufficiency to convey title to any of the Distributed Companies or the Transferred First Data Business Assets on the execution, delivery and filing of the Conveyancing Instruments or (c) the amount or nature of, or any other matter concerning, the Liabilities of the Distributed Companies. THE DISTRIBUTED COMPANIES (AND THEIR RESPECTIVE ASSETS) AND THE TRANSFERRED FIRST DATA BUSINESS ASSETS ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the First Data Parties shall bear the economic and legal risks that any conveyances of such assets shall prove to be insufficient or that the First Data Parties’ title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Operating Agreement, solely with respect to the Internal Distribution, none of the Western Union Parties represents or warrants that the obtaining of the consents or approvals, the execution and delivery of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments and, subject to Section 7.1 , the First Data Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with respect to the Internal Distribution.

ARTICLE VIII

CERTAIN COVENANTS

SECTION 8.1 Governmental Approvals and Consents; Third Party Consents . Prior to the Distribution, the Parties hereto will use their respective commercially reasonable efforts to obtain all Governmental Approvals and Consents and all Third Party Consents that are required or appropriate in connection with the transactions contemplated by this Agreement.

SECTION 8.2 Non-Assignable Contracts . (a) If and to the extent that any First Data Party is unable to obtain any consent, approval or amendment necessary for the transfer or

 

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assignment to any Western Union Party of any Contract or other rights relating to the Western Union Business that would otherwise be transferred or assigned to such Western Union Party as contemplated by this Agreement or any other agreement or document contemplated hereby, (i) such First Data Party shall continue to be bound thereby and the purported transfer or assignment to such Western Union Party shall automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained and (ii) unless not permitted by the terms thereof or by law, the Western Union Parties shall pay, perform and discharge fully all of the obligations of the First Data Parties thereunder from and after the Distribution, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the First Data Parties for all Losses arising out of such performance by such Western Union Party. The First Data Parties shall, without further consideration therefor, pay and remit to the applicable Western Union Party promptly all monies, rights and other considerations received in respect of such performance. The First Data Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and documents referred to in this Section 8.2(a) only as reasonably directed by Western Union and at Western Union’s expense. If and when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the First Data Parties shall promptly assign or transfer and novate (to the extent permissible) all of their rights and obligations thereunder to the applicable Western Union Party without payment of further consideration, and the Western Union Party shall, without the payment of any further consideration therefor, assume such rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 8.2(a) is prohibited by law or the terms thereof, this Section 8.2(a) shall operate to create a subcontract with the applicable Western Union Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the First Data Parties with respect to the performance by such Western Union Party.

(b) If and to the extent that any Western Union Party is unable to obtain any consent, approval or amendment necessary for the transfer or assignment to any First Data Party of any Contract or other rights relating to the First Data Business that would otherwise be transferred or assigned to such First Data Party as contemplated by this Agreement or any other agreement or document contemplated hereby, (i) such Western Union Party shall continue to be bound thereby and the purported transfer or assignment to such First Data Party shall automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained and (ii) unless not permitted by the terms thereof or by law, the First Data Parties shall pay, perform and discharge fully all of the obligations of the Western Union Parties thereunder from and after the Distribution, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the Western Union Parties for all indemnifiable Losses arising out of such performance by such First Data Party. The Western Union Parties shall, without further consideration therefor, pay and remit to the applicable First Data Party promptly all monies, rights and other considerations received in respect of such performance. The Western Union Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and documents referred to in this Section 8.2(b) only as reasonably directed by First Data and at First Data’s expense. If and when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the Western Union

 

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Parties shall promptly assign or transfer and novate (to the extent permissible) all of their rights and obligations thereunder to the applicable First Data Party without payment of further consideration, and the First Data Party shall, without the payment of any further consideration therefor, assume such rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 8.2(b) is prohibited by law or the terms thereof, this Section 8.2(b) shall operate to create a subcontract with the applicable First Data Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the Western Union Parties with respect to the performance by such First Data Party.

SECTION 8.3 Further Assurances . (a) Each Party shall use its commercially reasonable efforts, after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary or advisable under applicable laws to consummate or make effective the transactions contemplated by this Agreement; provided , however , that no First Data Party or Western Union Party shall be obligated under this Section 8.3(a) to pay any consideration, grant any concession or incur any Liability to any third Person.

(b) If, as a result of mistake or oversight, any asset or Contract reasonably necessary to the conduct of the Western Union Business is not transferred to the applicable Western Union Party, or any asset or Contract reasonably necessary to the conduct of the First Data Business is not transferred to the applicable First Data Party or is transferred to any Western Union Party, the Parties intend that such asset or Contract shall be transferred to the Party which requires such asset or Contract for the conduct of its business without the payment of any additional consideration (to the extent such asset or Contract is transferred on or prior to the one year anniversary of the Distribution Date), and First Data and Western Union shall negotiate in good faith after the Distribution to determine whether, notwithstanding such intent, such asset or Contract should not be transferred to a Western Union Party or to a First Data Party, as the case may be, and/or the terms and conditions upon which such asset or Contract shall be made available to a Western Union Party or to a First Data Party, as the case may be. Unless expressly provided to the contrary in this Agreement or any Operating Agreement, if, as a result of mistake or oversight, any Western Union Liability is retained or assumed by any First Data Party, or any First Data Liability is retained or assumed by any Western Union Party, the Parties intend that such Liability shall be transferred to the Party with respect to which such Liability relates without the payment of any additional consideration (to the extent such Liability is transferred on or prior to the one year anniversary of the Distribution Date), and First Data and Western Union shall negotiate in good faith after the Distribution to determine whether, notwithstanding such intent, such Liability should not be transferred to a Western Union Party or a First Data Party, as the case may be, and/or the terms and conditions upon which any such Liability shall be transferred. Notwithstanding anything to the contrary in this Section 8.3(b) , no First Data Party or Western Union Party shall be obligated under this Section 8.3(b) to pay any consideration, grant any concession or incur any Liability to any third Person other than the Liability to be transferred.

SECTION 8.4 Receipt of Misdirected Assets . In the event that at any time and from time to time after the Effective Time, any First Data Party shall receive from a Third Party an asset of the Western Union Business (including any remittances from account debtors in respect of the Western Union Business), such Party shall promptly transfer such asset to the appropriate

 

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Western Union Party. In the event that at any time and from time to time after the Effective Time, any Western Union Party shall receive from a Third Party an asset of the First Data Business (including any remittances from account debtors in respect of the First Data Business), such Party shall promptly transfer such asset to the appropriate First Data Party. Each Party shall cooperate with the other Party and use its commercially reasonable efforts to set up procedures and notifications as are reasonably necessary or advisable to effectuate the transfers contemplated by this Section 8.4 .

SECTION 8.5 Late Payments . Except as expressly provided to the contrary in this Agreement or in any Operating Agreement, any amount not paid when due pursuant to this Agreement or any Operating Agreement (and any amounts billed or otherwise invoiced or demanded in writing and properly payable that are not paid within 30 days of the date of such bill, invoice or other written demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.

SECTION 8.6 Certain Business Matters . (a) First Data represents that as of the date hereof, First Data management does not currently intend for First Data to re-enter the consumer money transfer business as conducted by Western Union as of the Effective Date.

(b) Notwithstanding Section 8.6(a) , following the Effective Time and except as otherwise set forth in any Operating Agreement (excluding Section 8.6(a) hereof), either Party may (i) engage in the same or similar activities or lines of business as the other Party is or in the future may be engaged in and/or (ii) do business, or refrain from doing business, with any potential or actual supplier or customer of the other Party

(c) Each Party agrees that, for a period of six months from the Distribution Date, such Party (a “ Soliciting Party” ) will not solicit for employment any employee of the other Party (a “ Protected Party ), provided , however , that it is understood that this employee non-solicitation provision shall not prohibit: (i) generalized solicitations by advertising and the like, which are not directed to specific individuals or employees of the Protected Party; (ii) solicitations of persons whose employment was terminated by the Protected Party; or (iii) solicitations of persons who have terminated their employment with the Protected Party without any prior solicitation by the Soliciting Party, and, provided further , that the restrictions on solicitation set forth in this Section 8.6(c) shall not apply to any Merchant Alliance.

SECTION 8.7 Litigation . (a) As of the Distribution, the Western Union Parties shall assume and thereafter, except as provided in Article XII , be responsible for all Liabilities that may result from the Assumed Actions and all fees and costs relating to the defense of the Assumed Actions, including attorneys’ fees and costs incurred after the Distribution. “ Assumed Actions ” means those Actions (in which any First Data Party or any Affiliate of a First Data Party, other than any Western Union Party, is a defendant or the Party against whom the claim or investigation is directed) primarily relating to the Western Union Business.

(b) The First Data Parties shall transfer the Transferred Actions to Western Union, and Western Union shall receive and have the benefit of all of the proceeds of such Transferred Actions. “ Transferred Actions ” means those Actions (in which any First Data Party or any of its Affiliates is a plaintiff or claimant) primarily relating to the Western Union Business,

 

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including those listed on Schedule 8.7(B) pursuant to the Transferred Action Assignment and Assumption Agreement.

(c) (i) First Data agrees that at all times from and after the Distribution if an Action relating primarily to the First Data Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then First Data shall use its commercially reasonable efforts to cause Western Union to be removed from such Action; provided that if First Data is unable to cause Western Union to be removed from such Action, First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.

(ii) Western Union agrees that at all times from and after the Effective Time if an Action relating primarily to the Western Union Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then Western Union shall use its commercially reasonable efforts to cause First Data to be removed from such Action; provided that if Western Union is unable to cause First Data to be removed from such Action, First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.

(iii) First Data and Western Union agree that at all times from and after the Distribution if an Action which does not relate primarily to the Western Union Business or the First Data Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.

(iv) Without limiting the generality of the foregoing, with respect to the Actions identified on Schedule 8.7(C) , First Data shall have the right to negotiate, settle and compromise such Actions on behalf of both all First Data Parties and all Western Union Parties, provided that, except to the extent First Data settles and compromises such Actions within the scope of the authorization set forth in Schedule 8.7(C) , First Data shall not settle or compromise such Actions with respect to the portion of such Actions which would constitute a Western Union Liability without the written consent of Western Union. Western Union agrees to reimburse First Data for its proportionate share of First Data’s Out-of-Pocket Expenses incurred in connection with such Actions, determined by dividing the amount of Western Union Liability with respect to such Actions by the sum of the amount of First Data Liability and Western Union Liability arising from such Actions.

SECTION 8.8 Signs; Use of Company Name . (a) Except as provided in the Operating Agreements, on or prior to 180 days after Distribution Date, the Parties hereto, at the expense of the Party which owns the tangible assets, shall remove (or, if necessary, on an interim basis cover up) any and all exterior and interior signs and identifiers on assets or properties owned or held by the Western Union Parties that refer or pertain to any First Data Party or the First Data Business, or on assets or properties owned or held by the First Data Parties that refer or pertain to any Western Union Party or the Western Union Business. Western Union hereby grants to the First Data Parties and First Data hereby grants to the Western Union Parties for a period of 180 days following the Distribution Date, a non-exclusive, non-transferable, fully-paid and royalty-free license to use their respective corporate names (the “ Marks” ) on stationery and signage used

 

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in their respective businesses as of the Effective Time. Notwithstanding the foregoing, First Data and Western Union shall use reasonable efforts to change all references to the other Party’s Marks as soon as practicable following the Effective Time.

(b) Except as provided in the Operating Agreements, after 180 days following the Effective Time, (i) without the prior written consent of First Data, the Western Union Parties shall not use or display the name First Data, or any variations thereof, or other trademarks, any trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any First Data Party that have not been assigned or licensed to a Western Union Party, and (ii) without the prior written consent of Western Union, the First Data Parties shall not use or display the name Western Union or any variations thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any Western Union Party that have not been assigned or licensed to a First Data Party; provided, however, that notwithstanding the foregoing, nothing contained in this Agreement shall prevent either Party hereto from using the other’s name in public filings with Governmental Authorities, materials intended for distribution to either Party’s stockholders or any other communication in any medium that describes the relationship between the Parties, including materials distributed to employees relating to the transition of employee benefit plans; and, provided further, that the continuation of references to the Marks in telephone directories (and other similar third Party or incidental uses which are not capable of being updated within the time period set forth above) for a period not to exceed one year following the Effective Time shall not be deemed a breach of this Section 8.8 .

SECTION 8.9 Stock Options Registration Statement . Western Union shall prepare and file with the SEC such amendments and supplements to the Stock Options Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Stock Options Registration Statement effective under the Securities Act for a period of not less than ten (10) years following the Distribution Date, provided that, Western Union’s obligations pursuant to this Section 8.9 shall terminate on the date upon which there are no further securities covered thereby which may be issued pursuant to the terms of the applicable stock option agreements.

ARTICLE IX

CONDITIONS TO THE DISTRIBUTION

SECTION 9.1 Conditions to the Distribution . The obligation of First Data to effect the Distribution is subject to the satisfaction or the waiver by First Data, in its sole and absolute discretion, of each of the following conditions:

(a) Approval by the First Data Board of Directors . This Agreement and the transactions contemplated hereby, including the declaration of the Distribution, shall have been duly approved by the Board of Directors of First Data in accordance with applicable law and the Second Amended and Restated Certificate of Incorporation and By-laws of First Data.

(b) Receipt of IRS Private Letter Ruling and Opinion . First Data shall have received (i) a private letter ruling from the IRS (which shall not have been revoked or modified in any material respect) in form and substance satisfactory to First Data, to the effect that, among other

 

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things, the Contribution followed by the Distribution, taken together, will be tax-free to First Data, Western Union and holders of First Data Common Stock for United States federal income tax purposes under Sections 355, 368 and related provisions of the Code and (ii) with respect to certain requirements necessary to obtain tax-free treatment under Section 355 of the Code on which the IRS will not rule, an opinion of Sidley Austin LLP (or other nationally recognized tax counsel), in form and substance satisfactory to First Data, to the effect that such requirements will be satisfied.

(c) Receipt of Solvency Conveyance Opinion . An independent firm acceptable to First Data, in its sole and absolute discretion, shall have delivered one or more opinions to the Board of Directors of each of First Data and Western Union confirming the solvency and financial viability of Western Union and First Data, which opinions shall be in form and substance satisfactory to First Data, in its sole and absolute discretion, and shall not have been withdrawn or rescinded.

(d) State and Foreign Securities and “Blue Sky” Laws Approvals . First Data and Western Union shall have received all permits, registrations and consents required under the securities or “blue sky” laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the Distribution.

(e) SEC Filings and Approvals . The Parties shall have prepared and Western Union shall, to the extent required under applicable law, have filed with the SEC any such documentation that First Data determines, in its sole and absolute discretion, is necessary or desirable to effectuate the Distribution and the other transactions contemplated by this Agreement and the Operating Agreements, and each Party shall have obtained all necessary approvals from the SEC.

(f) Effectiveness of Registration Statements; No Stop Order . The SEC shall have declared effective the Form 10 Registration Statement and the Stock Options Registration Statement, and no stop order suspending the effectiveness of the Form 10 Registration Statement and the Stock Options Registration Statement shall be in effect or, to the knowledge of either First Data or Western Union, threatened by the SEC.

(g) Permits . First Data and Western Union shall have received all material Governmental Approvals and Consents and all material permits, registrations, clearances and consents from Third Parties, in each case, necessary to effect the Distribution and permit the operation of the Western Union Business thereafter.

(h) Dissemination of Information to First Data Stockholders . Prior to the Distribution, the Parties shall have prepared and mailed to the holders of record of First Data Common Stock such information concerning Western Union, its business, operations and management, the Distribution and such other matters as First Data shall determine in its sole and absolute discretion and as may otherwise be required by law.

(i) Approval of NYSE Listing Application . The NYSE shall have approved the Western Union Common Stock for listing, subject to official notice of issuance.

 

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(j) Resignations . Prior to the Distribution, all of First Data’s representatives or designees shall have resigned or been removed as officers and directors from all Western Union Parties and such Western Union Parties’ Boards of Directors or similar governing bodies, and all of Western Union’s representatives or designees shall have resigned or been removed as officers and directors from all First Data Parties and such First Data Parties’ Boards of Directors or similar governing bodies.

(k) Consents . First Data and Western Union shall have received all Governmental Approvals and Consents and all Third Party Consents necessary to effect the Contribution and the Distribution and to permit the operation of the Western Union Business after the Distribution Date.

(l) No Legal Restraint . No order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the transactions related thereto, including the Contribution, shall be in effect.

(m) Consummation of Pre-Distribution Transactions . The pre-Distribution transactions contemplated by Articles II and III , including the execution and delivery of the Operating Agreements, shall have been consummated.

(n) Credit Ratings . First Data and Western Union shall have each received credit ratings from the credit rating agencies that are satisfactory to First Data in its sole and absolute discretion.

(o) Exchange Agreement . All of the conditions under the Exchange Agreement shall have been satisfied (other than the condition that the Distribution has occurred and other than those conditions which can only be satisfied at the consummation of the Debt Exchange).

(p) No Other Events . No other events or developments shall have occurred that, in the judgment of the Board of Directors of First Data, in its sole and absolute discretion, would result in the Contribution or the Distribution having a material adverse effect on First Data or its stockholders.

SECTION 9.2 First Data Right Not to Close or to Terminate . The satisfaction of the foregoing conditions are for the sole benefit of First Data and shall not give rise to or create any duty on the part of First Data or the Board of Directors of First Data to waive or not waive any such condition or to effect the Distribution, or in any way limit First Data’s power of termination set forth in Section 15.13 .

ARTICLE X

INSURANCE MATTERS

SECTION 10.1 Insurance Prior to the Distribution Date . Except as may otherwise be expressly provided in this Article X , Western Union does hereby agree, for itself and on behalf of the Western Union Parties, that the First Data Parties shall not have any Liability whatsoever as a result of the insurance policies, insurance contracts and claim administration contracts and practices related to the foregoing of the First Data Parties in effect at any time prior

 

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to the Effective Time, including as a result of the level or scope of any such insurance policies, insurance contracts, claim administration contracts, the creditworthiness of any insurance carrier, the terms and conditions of any policy or contract and the adequacy or timeliness of any notice to any insurance carrier or claims administrator with respect to any actual claim or potential claim or otherwise.

SECTION 10.2 Ownership of Existing Policies and Programs . First Data or one or more of the other First Data Parties shall continue to own all insurance policies, insurance contracts and claim administration contracts of any kind of any First Data Party which were or are in effect at any time at or prior to the Effective Time (other than insurance policies, insurance contracts and claim administration contracts established in contemplation of the Distribution to cover only the Western Union Parties after the Effective Time), including general liability (whether primary, excess or umbrella), fiduciary liability, automobile, aircraft hull and liability, all risk property (including business interruption) and casualty, directors and officers liability, employer’s liability, workers’ compensation, comprehensive crime, errors and omissions and property/boiler and machinery insurance policies, together with all rights, benefits and privileges thereunder (collectively, the “ First Data Policies ”). Subject to the provisions of this Agreement, (a) the First Data Parties shall retain all of their respective rights, benefits and privileges, if any, under the First Data Policies and (b) coverage of the Western Union Parties under the First Data Policies shall cease as of the Effective Time. Nothing contained herein shall be construed to be an attempted assignment of or a change to any part of the ownership of the First Data Policies.

SECTION 10.3 Maintenance of Insurance for Western Union . Until the Effective Time, First Data shall maintain in full force and effect the First Data Policies to the extent that such policies apply to the Western Union Business.

SECTION 10.4 Acquisition and Maintenance of Post-Distribution Insurance by Western Union . Commencing on and as of the Distribution Date, Western Union shall be responsible for establishing and maintaining separate property damage and business interruption and liability insurance policies and programs (including general liability (whether primary, excess or umbrella), fiduciary liability, automobile, aircraft hull and liability, all risk property (including business interruption) and casualty, directors and officers liability, employer’s liability, workers’ compensation, comprehensive crime, errors and omissions and property/boiler and machinery insurance policies) for activities and claims involving any Western Union Party or any of their Affiliates, in each case with commercially reasonable limits and deductibles or self-insured retentions. Each of the Western Union Parties and each of their Affiliates, as appropriate, shall be responsible for all administrative and financial matters relating to insurance policies established and maintained by the Western Union Parties and each of their Affiliates for claims relating to any period at or after the Effective Time involving any Western Union Party or any of its Affiliates.

SECTION 10.5 Rights Under Shared Policies . (a) At and after the Effective Time: (i) Western Union will have the right to assert claims (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing) for any Losses with respect to the Western Union Business and the Transferred Business Assets under First Data Policies that include any Western Union Party and/or any or all of the Western Union Business within the definition of the named insured, additional named

 

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insured, additional insured or insured (excluding, for the avoidance of doubt, any group health and welfare insurance policies) (“ Shared Policies ”) with Third Party insurers that are “occurrence based” insurance policies (“ Occurrence Based Policies ”) arising out of insured occurrences occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Occurrence Based Policies and agreements relating thereto so allow; (ii) Western Union will have the right to continue to prosecute claims with respect to the Western Union Business properly asserted under Occurrence Based Policies prior to the Effective Time to the extent that the terms and conditions of any such Occurrence Based Policies and agreements relating thereto so allow (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing); and (iii) Western Union will have the right to assert and/or continue to prosecute claims with respect to the Western Union Business and the Transferred Business Assets (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing) under Shared Policies with Third Party insurers that are made under liability insurance policies written on a “claims made” basis (“ Claims Made Policies ”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Claims Made Policies and agreements relating thereto so allow; provided, that in the case of clauses (i) , (ii)  and (iii) , (A) all of the First Data Parties’ reasonable Out-of-Pocket Expenses incurred in connection with their efforts to assist Western Union in asserting or continuing to prosecute the claims described above are promptly paid by Western Union following receipt of an invoice for such expenses, (B) subject to Section 10.5(b) , the First Data Parties may, at any time, without liability or obligation to the Western Union Parties, amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Shared Policies (and such claims shall be subject to any such amendments, commutations, terminations, buy-outs, extinguishments and modifications), (C) such claims will be subject to (and recovery thereon will be reduced by the amount of) any applicable deductibles, retentions or self-insurance provisions, and, with respect to any such deductibles, retentions or self-insurance provisions which require a payment by a First Data Party or any Affiliate of a First Data Party in respect thereof, Western Union shall reimburse such First Data Party or Affiliate for such payment, (D) Western Union shall be responsible for and shall pay any claims handling expenses or residual Liability arising from such claims and (E) such claims will be subject to exhaustion of existing sublimits and aggregate limits as provided in Section 10.5(b) . First Data’s obligation to use commercially reasonable efforts to assist Western Union in asserting claims under applicable Shared Policies will include using commercially reasonable efforts to assist Western Union to establish its right to coverage under such Shared Policies (so long as all of the First Data Parties’ Out-of-Pocket Expenses in connection therewith are promptly paid by Western Union). No First Data Party will bear any Liability for the failure of an insurer to pay any claim under any Shared Policy. It is understood that any Claims Made Policies may not provide any coverage to the Western Union Parties for incidents occurring prior to the Effective Time but that are asserted with the insurance carrier after the Effective Time.

(b) In the event that after the Effective Time First Data proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Shared Policies under which Western Union has or may in the future have rights to assert claims pursuant to this Article X in a manner that would adversely affect any such rights of Western Union, (i) First Data will give Western Union prior notice thereof and consult with Western Union with respect

 

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to such action, (ii) First Data will not take such action without the prior written consent of Western Union, such consent not to be unreasonably withheld, and (iii) First Data will pay to Western Union its equitable share (which shall be mutually agreed upon by First Data and Western Union, acting reasonably), if any, of any net proceeds actually received by First Data from the insurer under the applicable Shared Policy as a result of such action by First Data (after deducting First Data’s reasonable costs and expenses incurred in connection with such action).

(c) To the extent that the limits of any Shared Policy preclude payment in full of Unrelated Claims filed by First Data and Western Union, the insurance proceeds available under such Shared Policy shall be paid to First Data and/or Western Union on a FIFO Basis. In the event that First Data and Western Union file Related Claims under any Shared Policy, each of First Data and Western Union shall receive a pro rata amount of the available insurance proceeds, based on the relationship the Loss incurred by each such Party bears to the total Loss to both such Parties from the occurrence or event underlying the Related Claims.

SECTION 10.6 Administration and Reserves . (a) From and after the Effective Time, the First Data Parties will be responsible for the Claims Administration with respect to claims of the First Data Parties under Shared Policies.

(b) From and after the Effective Time, the Western Union Parties will be responsible for the Claims Administration with respect to claims of the Western Union Parties under Shared Policies, and First Data shall provide appropriate instructions to the applicable insurance brokers under the Shared Policies to facilitate Claims Administration by Western Union.

(c) Any reserves of the First Data Parties with respect to the Western Union Business shall be transferred to Western Union by such First Data Parties on or prior to the Effective Time.

SECTION 10.7 Insurance Premiums . From and after the Effective Time, First Data will pay all premiums, taxes, assessments or similar charges (retrospectively-rated or otherwise) as required under the terms and conditions of the respective Shared Policies in respect of periods of coverage prior to the Effective Time, whereupon Western Union will upon the request of First Data promptly reimburse First Data for that portion of such additional premiums and other payments paid by First Data as are reasonably determined by First Data to be attributable to the Western Union Business. Notwithstanding the foregoing, to the extent that Western Union has previously paid a premium (or has been allocated a portion of a premium by First Data) or satisfied a deductible amount under a Shared Policy, Western Union shall not be required to pay such premium pursuant to the foregoing sentence or satisfy such deductible again if Western Union makes a claim under such Shared Policy in accordance with this Article X .

SECTION 10.8 Agreement for Waiver of Conflict and Shared Defense . In the event that a Shared Policy provides coverage for both a First Data Party, on the one hand, and a Western Union Party, on the other hand, relating to the same occurrence, First Data and Western Union agree to defend jointly, provided that in the event there is a conflict of interest which in the reasonable opinion of either Party would otherwise prevent the conduct of that joint defense, the Parties shall cooperate to pursue coverage under such Shared Policy pursuant to appropriate arrangements (which may require separate counsel) as permitted by such Shared Policy. Nothing

 

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in this Section 10.8 will be construed to limit or otherwise alter in any way the indemnity obligations of the Parties, including those created by this Agreement, by operation of law or otherwise.

SECTION 10.9 Duty to Mitigate Settlements . To the extent that any Party is responsible for the Claims Administration for any claims under any Shared Policies after the Effective Time, such Party shall use its commercially reasonable efforts to mitigate the amount of any settlements of such claims.

SECTION 10.10 Non-Waiver of Rights to Coverage . An insurance carrier that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Article X, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurance carrier or any third Party shall be entitled to a benefit (i.e., a benefit such Person would not be entitled to receive had the Distribution not occurred or in the absence of the provisions of this Article X ) by virtue of the provisions hereof.

ARTICLE XI

EXPENSES

SECTION 11.1 Expenses Incurred On or Prior To the Distribution Date . Except as otherwise provided in this Agreement, any Operating Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties hereto, each of First Data and Western Union shall pay all Third Party fees, costs and expenses paid or incurred by it (including those fees, costs and expenses identified on Schedule 11.1(A) ) in connection with the preparation, execution, delivery and implementation of this Agreement, any Operating Agreement, any other agreement contemplated hereby, the Form 10 Registration Statement, the Stock Options Registration Statement and the Distribution and the consummation of the transactions contemplated hereby and thereby (“ Separation Costs ”); provided , however , that First Data will pay all non-recurring Third Party fees, costs and expenses in connection with the foregoing incurred on or prior to the Distribution Date that First Data deems necessary to effect the Distribution (including those Separation Costs identified on Schedule 11.1(B) ) and Western Union will pay all non-recurring Third Party fees, costs and expenses in connection with the foregoing incurred prior to the Distribution that are expected to benefit Western Union following the Distribution in the ordinary course of business (including those Separation Costs identified on Schedule 11.1(C) ).

SECTION 11.2 Expenses Incurred or Accrued After the Distribution Date . Except as otherwise provided in this Agreement, any Operating Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties hereto, First Data and Western Union shall each bear its own costs and expenses incurred after the Distribution Date.

 

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ARTICLE XII

INDEMNIFICATION

SECTION 12.1 Release of Pre-Distribution Claims .

(a) Except as provided in Section 12.1(b) , effective as of the Distribution Date, each Party hereto does hereby, on behalf of itself and its successors and assigns, release and forever discharge the other Party and such other Party’s respective successors and assigns and all Persons who at any time prior to the Distribution Date have been directors, officers or employees of such other Party (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all demands, Actions and Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any Contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Distribution.

(b) Nothing contained in Section 12.1(a) shall impair any right of any Person identified in Section 12.1(a) to enforce this Agreement, any Transaction Agreement or any Employee Contract. Nothing contained in Section 12.1(a) shall release or discharge any Person from:

(i) any Liability or obligation provided in or resulting from any Merchant Alliance Agreement to the extent set forth therein;

(ii) any Liability, contingent or otherwise, assumed, transferred, assigned, retained or allocated to that Person in accordance with, or any other Liability of that Person under, this Agreement or any of the Transaction Agreements;

(iii) any Liability that any Party may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties or their respective Subsidiaries or Affiliates by Third Parties, which Liability shall be governed by the provisions of this Article XII ;

(iv) any Liability that any Party may have with respect to indemnification or contribution pursuant to any of the Operating Agreements for claims brought against the Parties or their respective Subsidiaries or Affiliates by Third Parties, which Liability shall be governed by the provisions of the appropriate provisions of the Operating Agreements;

(v) any Liability the release of which would result in the release of any Person other than a First Data Party or a Western Union Party or their respective directors, officers and employees; provided , however , that the Parties hereto agree not to bring suit against the other Party or any of their respective directors, officers and employees with respect to any such Liability;

(vi) any Liability or obligation provided in or resulting from any Employee Contract; or

 

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(vii) any Liability or obligation between a Western Union Party and a Merchant Alliance.

In addition, nothing contained in Section 12.2(a) shall release any Party from honoring its existing obligations to indemnify any Person who was a director, officer or employee of such Party, at or prior to the Effective Time, to the extent such Person becomes a named defendant in any Action involving such Party, and was entitled to such indemnification pursuant to then existing obligations; provided , however , that to the extent applicable, Sections 12.2 and 12.3 hereof shall determine whether any Party shall be required to indemnify the other in respect of such Liability.

(c) No Party hereto shall make, nor permit any Affiliates to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other Party, or any other Person released pursuant to Section 12.1(a) , with respect to any Liability released pursuant to Section 12.1(a) .

(d) It is the intent of each of the Parties hereto by virtue of the provisions of this Section 12.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date between the First Data Parties and the Western Union Parties (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the Distribution Date), except as expressly set forth in Section 12.1(b) . At any time, at the reasonable request of either Party, the other Party hereto shall execute and deliver releases reflecting the provisions hereof.

SECTION 12.2 Indemnification by Western Union . Except as provided in Section 12.5 , as expressly provided in the Operating Agreements or as provided in Schedule 12.2 , Western Union shall indemnify, defend and hold harmless the First Data Parties (for so long as such Person is a First Data Party) and each of their Affiliates (for so long as such Person is an Affiliate of a First Data Party), directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ First Data Indemnified Parties ”), from and against any and all Expenses or Losses incurred or suffered by one or more of the First Data Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:

(a) the failure by any Western Union Party or any other Person to pay, perform or otherwise promptly discharge any Western Union Liability;

(b) any Western Union Liability;

(c) the Western Union Business as conducted (regardless of whether by First Data and its Subsidiaries, including the Western Union Parties, or another Person) on, at any time prior to or at any time after the Distribution Date;

(d) except to the extent provided in Section 12.3(d) , any claim that the information included in the Form 10 Registration Statement or the Information Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact

 

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required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(e) except to the extent provided in Section 12.3(e) , any claim that the information included in the Note Offering Memorandum is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(f) except to the extent provided in Section 12.3(f) , any claim that the information included in the Stock Options Registration Statement or the prospectus forming a part thereof is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(g) the use by any Western Union Party after the Effective Time of the name First Data or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any First Data Party;

(h) the breach by any Western Union Party of any covenant or agreement set forth in this Agreement or any Conveyancing Instrument;

(i) any item or matter for which reimbursement or indemnification is to be provided by Western Union in accordance with Section 7.04 of the Employee Matters Agreement; and

(j) any Western Union Financial Instrument,

in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date.

SECTION 12.3 Indemnification by First Data . Except as provided in Section 12.5 and except as expressly provided in the Operating Agreements or as provided in Schedule 12.3 , First Data shall indemnify, defend and hold harmless the Western Union Parties (for so long as such Person is a Western Union Party) and each of their Affiliates (for so long as such Person is an Affiliate of a Western Union Party), directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Western Union Indemnified Parties ”), from and against any and all Expenses or Losses incurred or suffered by one or more of the Western Union Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:

(a) the failure by any First Data Party or any other Person to pay, perform or otherwise promptly discharge any First Data Liability;

 

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(b) any First Data Liability;

(c) the First Data Business as conducted (regardless of whether by First Data and its Subsidiaries, including the Western Union Parties, or another Person) on, at any time prior to or at any time after the Distribution Date;

(d) solely with respect to the information contained in the Form 10 Registration Statement or the Information Statement that is set forth on Schedule 12.3(D) (and to the extent provided therein), any claim that the information included in the Form 10 Registration Statement or the Information Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(e) solely with respect to the information contained in the Note Offering Memorandum that is set forth on Schedule 12.3(E) , any claim that the information included in the Note Offering Memorandum is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(f) solely respect to the information contained in the Stock Options Registration Statement or the prospectus forming a part thereof that is set forth on Schedule 12.3(F) , any claim that the information included in the Stock Options Registration Statement or the prospectus forming a part thereof is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(g) the use by any First Data Party after the Effective Time of the name Western Union or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any Western Union Party;

(h) the breach by any First Data Party of any covenant or agreement set forth in this Agreement or any Conveyancing Instrument;

(i) any item or matter for which reimbursement or indemnification is to be provided by First Data in accordance with Section 7.04 of the Employee Matters Agreement; and

(j) any First Data Financial Instrument,

in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date.

 

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SECTION 12.4 Applicability of and Limitation on Indemnification . Except as expressly provided herein, the indemnity obligation under this Article XII shall apply notwithstanding any investigation made by or on behalf of any Indemnified Party and shall apply without regard to whether the Loss or Expense for which indemnity is claimed hereunder is based on strict liability, absolute liability or any other theory of liability or arises as an obligation for contribution.

SECTION 12.5 Adjustment of Indemnifiable Losses .

(a) The amount that either Party (an “ Indemnifying Party ”) is required to pay to any Person entitled to indemnification hereunder (an “ Indemnified Party ”) shall be reduced by any insurance proceeds and other amounts actually recovered by or on behalf of such Indemnified Party in reduction of the related Expense or Loss. Each of First Data and Western Union shall use its respective reasonable best efforts to collect any proceeds under its respective available and applicable Third Party insurance policies to which it or any of its Subsidiaries is entitled prior to seeking indemnification or contribution under this Agreement, where allowed; provided , however , that any such actions by an Indemnified Party will not relieve the Indemnifying Party of any of its obligations under this Agreement, including the Indemnifying Party’s obligation to pay directly or reimburse the Indemnified Party for costs and expenses actually incurred by the Indemnified Party. If an Indemnified Party receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Expense or Loss and subsequently actually receives insurance proceeds or other amounts in respect of such Expense or Loss, then such Indemnified Party shall refund to the Indemnifying Party a sum equal to the lesser of (i) the after-tax amount of such insurance proceeds or other amounts actually received and (ii) the net amount of Indemnity Payments actually received previously. The Indemnified Party agrees that the Indemnifying Party shall be subrogated to such Indemnified Party under any insurance policy.

(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a “windfall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.

(c) Indemnity Payments (i) shall not be increased to take into account any tax costs incurred by the Indemnified Party arising from any Indemnity Payments from the Indemnifying Party and (ii) shall not be reduced to take into account any tax benefit received by the Indemnified Party arising from the incurrence or payment of any Indemnity Payment.

(d) Amounts paid by First Data to or for the benefit of Western Union or by Western Union to or for the benefit of First Data under this Article XII (and under other specified provisions of this Agreement) shall be treated by the Parties, for all applicable tax purposes, as adjustments to the amount of the value of the Western Union Subsidiaries and Transferred Business Assets.

 

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(e) In the event that an Indemnity Payment shall be denominated in a currency other than United States dollars, the amount of such payment shall be translated into United States dollars using the Foreign Exchange Rate for such currency determined in accordance with the following rules:

(i) with respect to an Expense or a Loss arising from payment by a financial institution under a guarantee, comfort letter, letter of credit, foreign exchange contract or similar instrument, the Foreign Exchange Rate for such currency shall be determined as of the date on which such financial institution shall have been reimbursed;

(ii) with respect to an Expense or a Loss covered by insurance, the Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate employed by the insurance company providing such insurance in settling such Expense or Loss with the Indemnifying Party; and

(iii) with respect to an Expense or a Loss not covered by clause (i)  or (ii)  above, the Foreign Exchange Rate for such currency shall be determined as of the date that notice of the claim with respect to such Expense or Loss shall be given to the Indemnified Party.

SECTION 12.6 Procedures for Indemnification of Third Party Claims .

(a) If any Third Party shall make any claim or commence any arbitration proceeding or suit (each such claim, proceeding or suit being a “ Third Party Claim ”) against any one or more of the Indemnified Parties with respect to which an Indemnified Party intends to make any claim for indemnification against Western Union under Section 12.2 or against First Data under Section 12.3 , such Indemnified Party shall promptly, but in no event later than 10 days after receipt by the Indemnified Party of written notice of the Third Party Claim, give written notice to the Indemnifying Party describing such Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified Party to provide notice in accordance with this Section 12.6(a) shall not relieve the related Indemnifying Party of its obligations under this Article XII , except to the extent that such Indemnifying Party is actually prejudiced by such failure to provide notice.

(b) The Indemnifying Party shall have 30 days after receipt of the notice referred to in Section 12.6(a) to notify the Indemnified Party that it elects to conduct and control the defense of such Third Party Claim. If the Indemnifying Party does not give the foregoing notice, the Indemnified Party shall have the right to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion subject to the provisions of this Section 12.6 , and the Indemnifying Party shall, upon request from any of the Indemnified Parties, promptly pay to such Indemnified Parties in accordance with the other terms of this Section 12.6(b) the amount of any Expense or Loss subject to indemnification hereunder resulting from the Third Party Claim. If the Indemnifying Party gives the foregoing notice, the Indemnifying Party shall have the right to undertake, conduct and control, through counsel reasonably acceptable to the Indemnified Party, and at its sole expense, the conduct and settlement of such Third Party Claim, and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith, provided that: (i) the Indemnifying Party shall use its reasonable best efforts to prevent any lien, encumbrance or other adverse charge to thereafter attach to any asset of any Indemnified Party;

 

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(ii) the Indemnifying Party shall use its reasonable best efforts to prevent any injunction against any Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified Party and any counsel chosen by the Indemnified Party and reasonably acceptable to the Indemnifying Party to monitor such conduct or settlement and shall provide the Indemnified Party and any such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but the fees and expenses of such counsel chosen by the Indemnified Party shall be borne by the Indemnified Party unless (A) the Indemnifying Party and the Indemnified Party shall have mutually agreed that the Indemnifying Party should pay for such counsel or (B) the named parties to any such Third Party Claim include the Indemnified Party and the Indemnifying Party and representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and disbursements of counsel for such Indemnified Party shall be paid or reimbursed by the Indemnifying Party; and (iv) the Indemnifying Party shall agree promptly to reimburse to the extent required under this Article XII the Indemnified Party for the full amount of any Expense or Loss resulting from such Third Party Claim. In no event shall the Indemnifying Party, without the prior written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all liability in respect of such claim.

If the Indemnifying Party shall not have undertaken the conduct and control of the defense of any Third Party Claim as provided above, the Indemnifying Party shall nevertheless be entitled through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Party to monitor the conduct or settlement of such claim by the Indemnified Party, and the Indemnified Party shall provide the Indemnifying Party and such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but all costs and expenses incurred in connection with such monitoring shall be borne by the Indemnifying Party.

(c) Subject to Section 12.6(f) , so long as the Indemnifying Party is contesting any such Third Party Claim in its reasonable good faith judgment or is settling such Third Party Claim in accordance with this Section 12.6 , the Indemnified Party shall not pay or settle any such Third Party Claim.

(d) If the Indemnified Party determines in its reasonable good faith judgment that the Indemnifying Party is not contesting such Third Party Claim in good faith or is not settling such Third Party Claim in accordance with this Section 12.6 , the Indemnified Party shall have the right to undertake control of the defense of such Third Party Claim upon five (5) days written notice to the Indemnifying Party and thereafter to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion.

(e) If the Indemnified Party shall have undertaken the conduct and control of the defense of any Third Party Claim as provided in (b) or (d) above, the Indemnified Party, on not less than 30 days prior written notice to the Indemnifying Party, may make settlement (including payment in full) of such Third Party Claim, and such settlement shall be binding upon the Parties for the purposes hereof, unless within said 30-day period the Indemnifying Party shall have requested the Indemnified Party to contest such Third Party Claim at the expense of the

 

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Indemnifying Party. In such event, but subject to Section 12.6(f) , the Indemnified Party shall promptly comply with such request and the Indemnifying Party shall have the right to direct the defense of such claim or any litigation based thereon subject to all of the conditions of Section 12.6(b) .

(f) Notwithstanding the limitations on the Indemnified Party’s right to settle a Third Party Claim pursuant to Section 12.6(c) and Section 12.6(e) , the Indemnified Party shall have the right to pay or settle any Third Party Claim, provided that, in such event the Indemnified Party shall waive any right to indemnity therefor by the Indemnifying Party, and no amount in respect thereof shall be claimed as an Expense or a Loss under this Article XII .

(g) To the extent that, with respect to any claim governed by Article V of the Tax Allocation Agreement, there is any inconsistency between the provisions of such Article and of this Section 12.6 , the provisions of Article V of the Tax Allocation Agreement shall control with respect to such claim.

SECTION 12.7 Procedures for Indemnification of Direct Claims . Any claim for indemnification on account of an Expense or a Loss made directly by the Indemnified Party against the Indemnifying Party and that does not result from a Third Party Claim shall be asserted by written notice from the Indemnified Party to the Indemnifying Party specifically claiming indemnification hereunder. Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to provide indemnification with respect to such claim. If such Indemnifying Party does not respond within such 30-day period or does respond within such 30-day period and rejects such claim in whole or in part, such Indemnified Party shall be free to pursue resolution as provided in Article XIII .

SECTION 12.8 Contribution . If the indemnification provided for in this Article XII is judicially determined to be unavailable (other than in accordance with the terms of this Agreement, in which case this Section 12.8 shall not apply) to an Indemnified Party in respect of any Losses or Expenses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Expense or Loss in such proportion as is appropriate to reflect the relative fault of the Western Union Indemnified Parties, on the one hand, and the First Data Indemnified Parties, on the other hand, in connection with the conduct, statements or omissions that resulted in such Expense or Loss. The relative fault of any Western Union Indemnified Party, on the one hand, and of any First Data Indemnified Party, on the other hand, in the case of any Expense or Loss arising out of or related to information contained in the Form 10 Registration Statement, the Information Statement, the Note Offering Memorandum, the Stock Options Registration Statement (including the related prospectus) or other securities law filing shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by the Western Union Business or a Western Union Indemnified Party, on the one hand, or by the First Data Business or a First Data Indemnified Party, on the other hand. The information on Schedules 12.3(D) , 12.3(E) and 12.3(F) shall be deemed supplied by the First Data Business or the First Data Indemnified Parties. All other information in the Form 10

 

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Registration Statement, the Information Statement, the Note Offering Memorandum and the Stock Options Registration Statement (including the related prospectus) shall be deemed supplied by the Western Union Business or the Western Union Indemnified Parties.

SECTION 12.9 Remedies Cumulative . The remedies provided in this Article XII shall be cumulative and, subject to the provisions of Article XII , shall not preclude assertion by an Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

SECTION 12.10 Survival . All covenants and agreements of the Parties contained in this Agreement relating to indemnification shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein.

ARTICLE XIII

DISPUTE RESOLUTION

SECTION 13.1 Agreement to Arbitrate . Except as otherwise specifically provided herein or in any Transaction Agreement, the procedures for discussion, negotiation and arbitration set forth in this Article XIII shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement or any Transaction Agreement. Each Party hereto agrees on behalf of itself and its respective Affiliates that the procedures set forth in this Article XIII shall be the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any Action in or before any Governmental Authority, except as expressly provided in Section 13.7(b) and except to the extent provided under the Arbitration Act in the case of judicial review of arbitration results or awards. EACH PARTY ON BEHALF OF ITSELF AND ITS RESPECTIVE AFFILIATES IRREVOCABLY WAIVES ANY RIGHT TO ANY TRIAL IN A COURT THAT WOULD OTHERWISE HAVE JURISDICTION OVER ANY CLAIM, CONTROVERSY OR DISPUTE SET FORTH IN THE FIRST SENTENCE OF THIS SECTION 13.1 .

SECTION 13.2 Escalation and Mediation . (a) The Parties hereto agree to use commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, either Party involved in a dispute, controversy or claim may deliver a notice (an Escalation Notice ) demanding an in-person meeting involving representatives of the Parties hereto at a senior level of management of the Parties hereto (or if the Parties hereto agree, of the appropriate strategic business unit or division within each Party). A copy of any such Escalation Notice shall be given to the General Counsel, or like officer, of each Party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided , however , that the Parties shall use commercially reasonable efforts to meet within 30 days of delivery of the Escalation Notice.

 

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(b) The Parties may retain a mediator to aid the Parties in their discussions and negotiations by informally providing advice to the Parties. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the Parties, nor shall any opinion expressed by the mediator be admissible in any arbitration proceeding. The mediator shall be selected by the Party that did not deliver the applicable Escalation Notice from a list of individuals to be supplied to the Parties by JAMS/Endispute. Costs of the mediation shall be borne equally by the Parties involved in the matter, except that each Party shall be responsible for its own expenses. Mediation is a prerequisite to a demand for arbitration under Section 13.3 .

SECTION 13.3 Procedures for Arbitration . (a) At any time after the completion of the mediation required by Section 13.2(b) , either Party involved in the dispute, controversy or claim (regardless of whether such Party delivered the Escalation Notice) may, unless the Applicable Deadline (as hereinafter defined) has occurred, make a written demand (the “ Arbitration Demand Notice ”) that the dispute be resolved by binding arbitration, which Arbitration Demand Notice shall be given to the Parties to the dispute, controversy or claim in the manner set forth in Section 15.9 . If either Party shall deliver an Arbitration Demand Notice to another Party, such other Party may itself deliver an Arbitration Demand Notice to such first Party with respect to any related dispute, controversy or claim with respect to which the Applicable Deadline has not passed without the requirement of delivering an Escalation Notice or engaging in mediation as provided in Section 13.2 . No Party may assert that the failure to resolve any matter during any discussions or negotiations, the course of conduct during the discussions or negotiations or the failure to agree on a mutually acceptable time, agenda, location or procedures for the meeting, in each case, as contemplated by Section 13.2 , is a prerequisite to a demand for arbitration under this Section 13.3 . If either Party delivers an Arbitration Demand Notice with respect to any dispute, controversy or claim that is the subject of any then pending arbitration proceeding or of a previously delivered Arbitration Demand Notice, all such disputes, controversies and claims shall be resolved in the arbitration proceeding for which an Arbitration Demand Notice was first delivered unless the arbitrator(s) in his, her or their sole discretion determine(s) that it is impracticable or otherwise inadvisable to do so.

(b) Except as may be expressly provided in any Operating Agreement, any Arbitration Demand Notice may be given until two years after the later of (i) the occurrence of the act or event giving rise to the underlying claim (it being understood that in the case of a Third Party Claim, such date shall be the date of assertion of the Third Party Claim rather than the act or event underlying the Third Party Claim) and (ii) the date on which such act or event was, or should have been, in the exercise of reasonable due diligence, discovered by the Party asserting the claim (as applicable and as it may in a particular case be specifically extended by the Parties in writing, the “ Applicable Deadline ”). Any discussions, negotiations or mediations between the Parties pursuant to this Agreement or otherwise will not toll the Applicable Deadline unless expressly agreed in writing by the Parties. Each Party agrees on behalf of itself and its respective Subsidiaries and Affiliates that if an Arbitration Demand Notice with respect to a dispute, controversy or claim is not given prior to the expiration of the Applicable Deadline, such dispute, controversy or claim will be barred. Subject to Section 13.7(d) , upon delivery of an Arbitration Demand Notice pursuant to Section 13.3(a) prior to the Applicable Deadline, the dispute, controversy or claim shall be decided by one or more arbitrators in accordance with the rules set forth in this Article XIII .

 

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SECTION 13.4 Selection of Arbitrator(s) . (a) If the amount in dispute is less than $2,000,000, the mediator selected by the provisions set forth in Section 13.2(b) above shall also serve as the sole arbitrator. If the amount in dispute equals or exceeds $2,000,000, the mediator selected by the provisions set forth in Section 13.2(b) shall select a panel of three arbitrators from a list provided by JAMS/Endispute. After selection of such panel of arbitrators, the mediator shall have no further role with respect to the dispute. Any arbitrator selected pursuant to this Section 13.4(a) shall be disinterested with respect to each of the Parties and the matter and shall be reasonably competent in the applicable subject matter.

(b) The arbitrator(s) selected pursuant to Section 13.4(a) will set a time for the hearing of the matter which will commence no later than 90 days after the date of appointment thereof pursuant to Section 13.4(a) , and such hearing will be no longer than 30 days (unless in the judgment of the arbitrator(s), the matter is unusually complex and thereby requires a longer time, in which event such hearing shall be no longer than 90 days). The final decision of such arbitrator(s) will be rendered in writing to the Parties not later than 60 days after the last hearing date, unless otherwise agreed by the Parties in writing. Any judgment or decision of a panel of arbitrators pursuant to this Agreement shall be determined by concurrence of at least two of the three members of the panel of arbitrators appointed hereunder with respect to the applicable dispute.

SECTION 13.5 Hearings . Within the time period specified in Section 13.4(b) , the matter shall be presented to the arbitrator(s) at a hearing by means of written submissions of memoranda and verified witness statements, filed simultaneously, and responses, if necessary in the judgment of the arbitrator(s) or both of the Parties. If the arbitrator(s) deem(s) it to be essential to a fair resolution of the dispute, live cross-examination or direct examination may be permitted, but is not generally contemplated to be necessary. The arbitrator(s) shall actively manage the arbitration with a view to achieving a just, speedy and cost-effective resolution of the dispute, claim or controversy. The arbitrator(s) may, in his, her or their sole discretion, set time and other limits on the presentation of each Party’s case, its memoranda or other submissions, and refuse to receive any proffered evidence that the arbitrator(s), in his, her or their sole discretion, find(s) to be cumulative, unnecessary, irrelevant or of low probative nature. Except as otherwise set forth herein, any arbitration hereunder will be conducted in accordance with the JAMS/Endispute Streamlined Rules for Commercial, Real Estate and Construction Cases then prevailing. The decision of the arbitrator(s) will be final and binding on the Parties, and judgment thereon may be had and will be enforceable in any court having jurisdiction over the Parties. Arbitration awards will bear interest from the date of the award at an annual rate of the Prime Rate plus 2%. To the extent that the provisions of this Agreement and the prevailing rules of JAMS/Endispute conflict, the provisions of this Agreement shall govern.

SECTION 13.6 Discovery and Certain Other Matters . (a) Either Party involved in the applicable dispute, controversy or claim may request limited document production from the other Party of specific and expressly relevant documents, with the reasonable expenses of the producing Party incurred in such production paid by the requesting Party. Any such discovery (which rights to documents shall be substantially less than document discovery rights prevailing under the Federal Rules of Civil Procedure) shall be conducted expeditiously and shall not cause the hearing provided for in Section 13.5 to be adjourned except upon consent of both Parties or upon a showing of cause demonstrating that such adjournment is necessary to permit discovery

 

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essential to a Party to the proceeding. Depositions, interrogatories or other forms of discovery (other than the document production set forth above) shall not occur except by consent of both Parties. Disputes concerning the scope of document production and enforcement of the document production requests will be determined by written agreement of the Parties or, failing such agreement, will be referred to the arbitrator(s) for resolution. All discovery requests will be subject to the Parties’ rights to claim any applicable privilege. The arbitrator(s) will adopt procedures to protect the proprietary rights of the Parties and to maintain the confidential treatment of the arbitration proceedings (except as may be required by law). Subject to the foregoing, the arbitrator(s) shall have the power to issue subpoenas to compel the production of documents relevant to the dispute, controversy or claim.

(b) The arbitrator(s) shall have full power and authority to determine issues of arbitrability but shall otherwise be limited to interpreting or construing the applicable provisions of this Agreement or any Operating Agreement, and will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement or any Operating Agreement; it being understood, however, that the arbitrator(s) will have full authority to implement the provisions of this Agreement or any Operating Agreement subject hereto and to fashion appropriate remedies for breaches of this Agreement (including interim or permanent injunctive relief); provided , however , that the arbitrator(s) shall not have any authority in excess of the authority a court having jurisdiction over the Parties and the controversy or dispute would have absent these arbitration provisions. It is the intention of the Parties that in rendering a decision the arbitrator(s) give effect to the applicable provisions of this Agreement and the Operating Agreements and follow applicable law (it being understood and agreed that this sentence shall not give rise to a right of judicial review of the arbitrator(s)’s award).

(c) If a Party fails or refuses to appear at and participate in an arbitration hearing after due notice, the arbitrator(s) may hear and determine the controversy upon evidence produced by the appearing Party.

(d) Arbitration costs shall be borne equally by each Party involved in the matter, except that each Party shall be responsible for its own attorney’s fees and other costs and expenses, including the costs of witnesses selected by such Party.

SECTION 13.7 Certain Additional Matters . (a) Any arbitration award shall be a bare award limited to a holding for or against a Party and shall be without findings as to facts, issues or conclusions of law (including with respect to any matters relating to the validity or infringement of patents or patent applications) and shall be without a statement of the reasoning on which the award rests, but must be in adequate form so that a judgment of a court may be entered thereupon. Judgment upon any arbitration award hereunder may be entered in any court having jurisdiction thereof.

(b) Prior to the time at which one or more arbitrator(s) is appointed pursuant to Section 13.4 , either Party may seek one or more temporary restraining orders in a court of competent jurisdiction if necessary in order to preserve and protect the status quo. Neither the request for, nor the grant or denial of, any such temporary restraining order shall be deemed a waiver of the obligation to arbitrate as set forth herein, and the arbitrator(s) may dissolve,

 

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continue or modify any such order. Any such temporary restraining order shall remain in effect until the first to occur of the expiration of the order in accordance with its terms or the dissolution thereof by the arbitrator(s).

(c) Except as required by law, the Parties shall hold, and shall cause their respective officers, directors, employees, agents and other representatives to hold, the existence, content and result of mediation or arbitration in confidence in accordance with the provisions of Article XIV and except as may be required in order to enforce any award. Each of the Parties shall request that any mediator or arbitrator(s) comply with such confidentiality requirement.

(d) If at any time any arbitrator shall fail to serve as an arbitrator for any reason, the Parties shall select a new arbitrator who shall be disinterested as to the Parties and the matter in accordance with the procedure set forth herein for the selection of the initial arbitrator. The extent, if any, to which testimony previously given shall be repeated or as to which the replacement arbitrator elects to rely on the stenographic record (if there is one) of such testimony shall be determined by the arbitrator(s).

SECTION 13.8 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Operating Agreement during the course of dispute resolution pursuant to the provisions of this Article XIII with respect to all matters not subject to such dispute, controversy or claim to the extent such Party is obligated to do so pursuant to the underlying agreement.

SECTION 13.9 Law Governing Arbitration Procedures . The interpretation of the provisions of this Article XIII , only insofar as they relate to the agreement to arbitrate and any procedures pursuant thereto, shall be governed by the Arbitration Act and other applicable federal law. In all other respects, the interpretation of this Agreement shall be governed as set forth in Section 15.2 .

SECTION 13.10 Choice of Forum . Any arbitration hereunder shall take place in Denver, Colorado, unless otherwise agreed in writing by the Parties.

ARTICLE XIV

ACCESS TO INFORMATION AND SERVICES

SECTION 14.1 Agreement for Exchange of Information . (a) At all times from and after the Distribution Date for a period of ten years, as soon as reasonably practicable after written request: (i) First Data shall afford to the Western Union Parties and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at Western Union’s expense, provide copies of, all records, books, contracts, instruments, data, documents and other information (collectively, “ Information ”) in the possession or under the control of First Data immediately following the Distribution Date that relates to Western Union, the Western Union Business or the employees of the Western Union Business; and (ii) Western Union shall afford to the First Data Parties and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at First Data’s expense, provide copies of, all Information in the possession

 

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or under the control of Western Union immediately following the Distribution Date that relates to First Data, the First Data Business or the employees of the First Data Business; provided , however , that in the event that either First Data or Western Union determines that any such provision of or access to Information would be commercially detrimental in any material respect, violate any law or agreement or waive any attorney-client privilege, the work product doctrine or other applicable privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

(b) Either Party hereto may request Information under Section 14.1(a) or Section 14.7 : (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting Party; (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims defense, regulatory filings, litigation, tax or other similar requirements; (iii) for use in compensation, benefit or welfare plan administration or other bona fide business purposes; or (iv) to comply with its obligations under this Agreement or any Operating Agreement.

(c) Without limiting the generality of the foregoing, until the end of the first full Western Union fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each Party shall use its commercially reasonable efforts, to cooperate with the other Party’s Information requests to enable the other Party to meet its timetable for dissemination of its earnings releases, financial statements and enable such other Party’s auditors to timely complete their audit of the annual financial statements and review of the quarterly financial statements.

SECTION 14.2 Ownership of Information . Any Information owned by one Party that is provided to a requesting Party pursuant to Section 14.1 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such Information.

SECTION 14.3 Compensation for Providing Information . The Party requesting Information agrees to reimburse the providing Party for the reasonable costs, if any, of gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party. Except as otherwise specifically provided in this Agreement, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures, if any, and if there is no such standard methodology and procedures, then on a commercially reasonable basis.

SECTION 14.4 Retention of Records . To facilitate the possible exchange of Information pursuant to this Article XIV after the Distribution Date, except as otherwise required or agreed in writing, or as otherwise provided in the Tax Allocation Agreement, the Parties hereto agree to use commercially reasonable efforts to retain all Information in their respective possession or control on the Distribution Date in accordance with the policies and procedures of First Data as in effect on the Distribution Date or such other policies and procedures as may reasonably be adopted by the applicable Party after the Distribution Date as provided herein. For

 

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a period of ten years following the Distribution Date, prior to amending in any material respect its policies and/or legal hold procedures with respect to retention of Information held by such Party as of the Effective Time, the Party proposing to amend its policies and/or legal hold procedures shall use its commercially reasonable efforts to provide no less than 30 days’ prior written notice to the other Party, specifying the amendments proposed to be made, and if, prior to the scheduled date for implementation of such amended policies and/or legal hold procedures, the other Party requests in writing that implementation of such amended policies and/or legal hold procedures be delayed, the other Party shall defer implementation for an additional 30 days and shall discuss in good faith during such 30 day period the written concerns and objections of the other Party. Notwithstanding the foregoing, neither Party shall be required to delay implementation of any amendment to Information retention policies and legal hold procedures to the extent such amendments are required by applicable law.

SECTION 14.5 Limitation of Liability . No Party shall have any liability to the other Party (a) if any Information exchanged or provided pursuant to this Agreement that is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate, in the absence of gross negligence or willful misconduct by the Party providing such Information, or (b) if any Information is destroyed despite using commercially reasonable efforts to comply with the provisions of Section 14.4 .

SECTION 14.6 Production of Witnesses . At all times from and after the Distribution Date, each Party shall use commercially reasonable efforts to make available to the other Party (without cost (other than reimbursement of actual Out-of-Pocket Expenses) to, and upon prior written request of, the other Party) its directors, officers, employees and agents as witnesses to the extent that the same may reasonably be required by the other Party (giving consideration to business demands of such directors, officers, employees and agents) in connection with any legal, administrative or other proceeding (except in the case of any proceeding by one Party against the other Party) in which the requesting Party may from time to time be involved with respect to the Western Union Business, the First Data Business or any transactions contemplated hereby.

SECTION 14.7 Sharing of Knowledge . For a period of two years following the Distribution Date, subject to any limitations set forth in any Operating Agreement, as soon as reasonably practicable after written request: (i) to the extent that information or knowledge with respect to the Western Union Business as of or prior to the Effective Time is available through discussions with employees of the First Data Parties, First Data shall make such employees reasonably available to Western Union to provide such information or knowledge; and (ii) to the extent that information or knowledge relating to the First Data Business as of or prior to the Effective Time is available through discussions with employees of the Western Union Parties, Western Union shall make such employees reasonably available to First Data to provide such information or knowledge; provided , however , that in the event that either First Data or Western Union determines that any such provision of such information or knowledge would be commercially detrimental in any material respect, violate any law or agreement or waive any attorney-client privilege, the work product doctrine or other applicable privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

 

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SECTION 14.8 Confidentiality . (a) From and after the Distribution Date, each of First Data and Western Union shall hold, and shall cause their respective Subsidiaries and Affiliates and its and their directors, officers, employees, agents, consultants, advisors, and other representatives (collectively, “ Representatives ”) to hold, in strict confidence, with at least the same degree of care that applies to First Data’s confidential and proprietary information pursuant to policies in effect as of the Distribution Date or such other procedures as may reasonably be adopted by the receiving party after the Distribution Date, all Confidential Information of the disclosing party or any of its Subsidiaries or Affiliates obtained by it prior to the Distribution Date, accessed by it pursuant to Section 14.1 or furnished to it by or on behalf of the disclosing party or any of its Subsidiaries or Affiliates pursuant to this Agreement or, to the extent not addressed in an Operating Agreement, any agreement contemplated hereby, shall not use such Confidential Information (except as contemplated by this Agreement, an Operating Agreement or any agreement contemplated hereby) and shall not release or disclose such Confidential Information to any other Person, except its Representatives, who shall be bound by the provisions of this Section 14.8 ; provided , however , that First Data and Western Union and their respective Representatives may disclose or use such information if, and only to the extent that, (i) a disclosure of such information is compelled by judicial or administrative process or, in the opinion of the receiving party’s counsel, by other requirements of law (in which case such party will provide, to the extent practicable under the circumstances, advance written notice to the other party of its intent to make such disclosure), or (ii) receiving party can show that such information (A) has been published or has otherwise become available to the general public as part of the public domain without breach of this Agreement, (B) has been furnished or made known to the receiving party without any obligation to keep it confidential by a Third Party under circumstances which are not known to the receiving party to involve a breach of the Third Party’s obligations to a party hereto or (C) was developed independently of information furnished or made available to the receiving party as contemplated under this Agreement (except, in the case of each of (A), (B), and (C), to the extent that notwithstanding the foregoing, use or disclosure thereof would be prohibited by applicable law). Each of First Data and Western Union, respectively, shall be responsible for any breach of this Section 14.8 by any of its Representatives.

(b) Without limiting the generality of Section 14.8(a) , from and after the Distribution Date, each of First Data and Western Union will implement and maintain security measures with at least the same degree of care that applies to First Data’s confidential and proprietary information pursuant to policies in effect as of the Distribution Date or such other procedures as may reasonably be adopted by the receiving party after the Distribution that are designed to: (i) secure and maintain the confidentiality of Confidential Information of the other party; (ii) protect Confidential Information of the other party against anticipated threats or hazards; (iii) prevent Personal Information Incidents; and (iv) protect against loss or theft or unauthorized access, copying, disclosure, loss, damage, modification or use of Confidential Information of the disclosing party.

(c) From and after the Distribution Date, to the extent required by applicable law and subject to the proviso included in Section 14.8(a) , each of First Data and Western Union shall, and shall cause their respective Subsidiaries and Affiliates and its and their Representatives to only use Confidential Personal Information received from the other party: (i) in connection with the receiving party’s performance of this Agreement and/or as described in an Operating

 

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Agreement or any agreement contemplated hereby; and (ii) in compliance with any express written instructions given by the party to which the Confidential Personal Information belongs, as may be modified from time to time. Under completion of either party’s use of Confidential Personal Information pursuant to this subsection, at the request of the disclosing party, the receiving party will use commercially reasonable efforts to return such information to the disclosing party or destroy such information in accordance with past practice; provided , however , that if such return or destruction is not reasonably practical or imposes an undue administrative burden, the receiving party will maintain the Confidential Personal Information in compliance with the applicable requirements of this Section 14.8 and with its reasonable record retention and destruction policies.

(d) Each of First Data and Western Union agrees on behalf of itself and their respective Subsidiaries and Affiliates that in the performance of its obligations under this Agreement or the Transaction Agreements, it is a “data processor” to the extent it “processes personal data” on behalf of the other party within a European Economic Area country or received from the other party’s operations in such a country. The terms “data processor”, “processes personal data” and “data controller” shall have the meaning given or applicable to them in the European Union’s Directive 95/46/EC regarding the protection of personal data.

(e) Excluding Confidential Personal Information, each recipient of Confidential Information of the other may enhance its knowledge and experience retained in intangible form in the unaided memories of its Representatives as a result of developing, working with, or viewing the other party’s Confidential Information (collectively, Unaided Knowledge ). So long as the recipient complies with Section 14.8 of this Agreement, the recipient may develop, disclose, market, transfer and/or use Unaided Knowledge that may be generally similar to the other party’s Confidential Information (excluding Confidential Personal Information), and the other party shall not have any rights in the works created using such Unaided Knowledge nor any rights to compensation related to the recipient’s use of such Unaided Knowledge, nor any rights in the recipient’s business endeavors.

(f) Each of First Data and Western Union acknowledges that the disclosing party would not have an adequate remedy at law for the breach by the receiving Party of any one or more of the covenants contained in this Section 14.8 and agrees that, in the event of such breach, the disclosing party may, in addition to the other remedies that may be available to it, apply to a court for an injunction to prevent breaches of this Section 14.8 and to enforce specifically the terms and provisions of this Section 14.8 . Notwithstanding any other Section hereof, the provisions of this Section 14.8 shall survive the Distribution Date indefinitely.

(g) (i) Each of First Data and Western Union and their respective Subsidiaries and Affiliates will comply with applicable law with respect to the Confidential Personal Information received by it from the disclosing party and shall maintain procedures reasonably designed to detect and respond to Personal Information Incidents, including procedures for corrective action.

(ii) If a receiving party uses agents or subcontractors who will access, use or otherwise have control over Confidential Personal Information of the disclosing party, the receiving party will enter into a written agreement with such agents and subcontractors that will

 

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include confidentiality, use, non-disclosure and safeguards obligations that are at least as restrictive as those provisions to which the receiving party is subject hereunder.

(iii) Notwithstanding any other obligations either First Data or Western Union may have under applicable law, each of First Data and Western Union agrees to promptly notify the other party upon such party’s discovery of a potential or actual Personal Information Incident. Each of First Data and Western Union will also provide feedback as described below to the disclosing party about any impact such potential or actual Personal Information Incident may or will have on the disclosing party, its Subsidiaries, Affiliates and/or affected individuals ( e.g ., consumers, customers or employees). The party discovering the Personal Information Incident will provide the following information during such notification phone call: (A) problem statement; (B) expected resolution time (if known); provided, however, that if the resolution path is unknown at the time of the phone call, such party will advise the disclosing party that the path is unknown; and (C) the name and phone number of the receiving party representative(s) who may be contacted to obtain incident updates.

(iv) Each of First Data and Western Union understands and agrees that the disclosing party or its Affiliates may be required to report Personal Information Incidents to affected individuals and/or any governmental authority or agency having supervisory or oversight authority over the disclosing party and the disclosing party may provide such reports.

(v) In addition to any other obligations a receiving party may have under this Agreement, in the event of a Personal Information Incident, at the request of the disclosing party, a receiving party shall: (i) assist in the identification of affected persons and relevant jurisdictions; (ii) allocate call center resources and training to manage inquiries; (iii) provide affected persons with such assistance (credit monitoring, etc.) as the disclosing party deems reasonable; (iv) assist with the delivery of electronic, hard copy and/or telephonic notifications to affected individuals, as provided to the receiving party by the disclosing party; and (v) undertake a procedural review/audit to determine any appropriate corrective measures to avoid a similar situation recurring, and report to the disclosing party the corrective measures undertaken. If the Personal Information Incident results from a receiving party’s acts or omissions that are not otherwise excused pursuant to this Agreement or an applicable Operating Agreement, the receiving party will provide the notification assistance described above at no cost to the disclosing party. In all other cases, the disclosing party will be responsible for any costs associated with the receiving party’s provision of the requested notification assistance described above.

(h) This Section 14.8 shall not apply with respect to Confidential Information furnished to the receiving party or accessed by the receiving party pursuant to a Commercial Agreement, except to the extent that such Commercial Agreement incorporates the provisions of this Section 14.8 by reference.

(i) Notwithstanding the limitations set forth in this Section 14.8 , with respect to financial and other information related to the Western Union Parties for the periods during which such Western Union Parties were Subsidiaries of First Data, in addition to fulfilling its periodic reporting obligations with the SEC as required by applicable law, First Data shall be permitted to disclose such information in its earnings releases, investor calls, rating agency presentations and

 

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other similar disclosures to the extent such information has customarily been included by First Data in such disclosures.

SECTION 14.9 Privileged Matters . (a) Each of First Data and Western Union agrees to maintain, preserve and assert all privileges, including privileges arising under or relating to the attorney-client relationship (which shall include the attorney-client and work product privileges), not heretofore waived, that relate to the Western Union Business or the First Data Business for any period prior to the Distribution Date (each a “ Privilege ”). Each Party hereto acknowledges and agrees that any costs associated with asserting any Privilege shall be borne by the Party requesting that such Privilege be asserted. Each Party agrees that it shall not waive any Privilege that could be asserted under applicable law without the prior written consent of the other Party. The rights and obligations created by this Section 14.9 shall apply to all information relating to the First Data Business or the Western Union Business as to which, but for the Distribution, either Party would have been entitled to assert or did assert the protection of a Privilege (“ Privileged Information ”), including (i) any and all information generated prior to the Distribution Date but which, after the Distribution, is in the possession of either Party and (ii) all information generated, received or arising after the Distribution Date that refers to or relates to Privileged Information generated, received or arising prior to the Distribution Date.

(b) Upon receipt by either Party of any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information or if either Party obtains knowledge that any current or former employee of First Data or Western Union has received any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information of the other Party, such Party shall notify promptly the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it may have under this Section 14.9 or otherwise to prevent the production or disclosure of Privileged Information. Each Party agrees that it will not produce or disclose any information that may be covered by a Privilege of the Party under this Section 14.9 unless (i) the other Party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has entered a final, nonappealable order finding that the information is not entitled to protection under any applicable Privilege.

(c) First Data’s transfer of books and records and other information to Western Union, and First Data’s agreement to permit Western Union to possess Privileged Information existing or generated prior to the Distribution Date, are made in reliance on Western Union’s agreement, as set forth in Sections 14.8 and 14.9 , to maintain the confidentiality of Privileged Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 14.1 , the agreement to provide witnesses and individuals pursuant to Section 14.6 and the transfer of Privileged Information to Western Union pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 14.9 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to First Data in, or the obligations imposed upon Western Union by, this Section 14.9 . Western Union’s transfer of books and records and other information to First Data, and Western Union’s agreement to permit First Data to possess Privileged Information existing or generated prior to the Distribution Date, are made in reliance on First Data’s agreement, as set forth in Sections 14.8 and 14.9 , to maintain the confidentiality of Privileged

 

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Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 14.1 , the agreement to provide witnesses and individuals pursuant to Section 14.6 and the transfer of Privileged Information to First Data pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 14.9 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to Western Union in, or the obligations imposed upon First Data by, this Section 14.9 .

SECTION 14.10 Attorney Representation . First Data, on behalf of itself and the other First Data Parties, hereby waives any conflict of interest with respect to any attorney who is or becomes an employee of Western Union resulting from such person being an employee of First Data or any of its Subsidiaries (including the Western Union Parties) at any time prior to the Distribution and agrees to allow such attorney to represent the Western Union Parties in any transaction or dispute with respect to this Agreement, the Operating Agreements, the transactions contemplated hereby and thereby and transactions between the Parties which commence following the Distribution Date. Western Union, on behalf of itself and the other Western Union Parties, hereby waives any conflict of interest with respect to any attorney who is or becomes an employee of First Data resulting from such person being an employee of Western Union or any of its Subsidiaries (including the First Data Parties) at any time prior to the Distribution and agrees to allow such attorney to represent the First Data Parties in any transaction or dispute with respect to this Agreement, the Operating Agreements and the transactions contemplated hereby and thereby and transactions between the Parties which commence following the Distribution Date. In furtherance of the foregoing, each First Data Party and each Western Union Party will, upon request, execute and deliver a specific waiver as may be required in connection with a particular transaction or dispute under the applicable rules of professional conduct in order to effectuate the general waiver set forth above.

SECTION 14.11 Financial Information Certifications . (a) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of First Data to make the certifications required of them under the Sarbanes-Oxley Act of 2002, §302, within 30 days following the end of any fiscal quarter during which Western Union is a Subsidiary of First Data, Western Union shall provide a certification statement with respect to such quarter or portion thereof to those certifying officers and employees of First Data, which certification shall be in substantially the same form as had been provided by officers or employees of Western Union in certifications delivered prior to the Distribution Date (provided that such certification shall be made by Western Union rather than individual officers or employees), or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.

(b) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of Western Union to make the certifications required of them under the Sarbanese-Oxley Act of 2002, §302, within 30 days following the end of any fiscal quarter during which Western Union is a Subsidiary of First Data, First Data shall provide a certification statement with respect to testing of internal controls for corporate and shared services processes for such quarter or portion thereof to those certifying officers and employees of Western Union, which certification shall be in substantially the same form as had

 

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been provided by officers or employees of First Data in certifications delivered to its principal executive officer, principal financial officer and controller prior to the Distribution Date (provided that such certification shall be made by First Data rather than individual officers or employees,) or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.

ARTICLE XV

MISCELLANEOUS

SECTION 15.1 Entire Agreement . This Agreement and the Operating Agreements, including the Schedules and Exhibits referred to herein and therein and the documents delivered pursuant hereto and thereto, constitute the entire agreement between the Parties hereto with respect to the subject matter contained herein or therein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.

SECTION 15.2 Choice of Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Delaware.

SECTION 15.3 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.

SECTION 15.4 Waiver . 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 given for the purposes of this Agreement if, as to either Party, it is in writing signed by an authorized representative of such Party. The failure of either Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of either 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.

SECTION 15.5 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a 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 or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

SECTION 15.6 Execution in Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original instrument, but both of which shall be

 

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considered one and the same agreement, and shall become binding when the counterparts have been signed by and delivered to each of the Parties hereto.

SECTION 15.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).

SECTION 15.8 Third Party Beneficiaries . Except to the extent otherwise provided in Article X (solely with respect to the directors and officers insurance policy), Article XII and Section 14.10 , the provisions of this Agreement are solely for the benefit of the Parties and their respective Subsidiaries, Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement or any Operating Agreement.

SECTION 15.9 Notices . All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after mailing or (iv) if sent by private courier when received; and shall be addressed as follows:

If to First Data, to:

First Data Corporation

6855 Pacific Street, AK-31

Omaha, Nebraska 68106

Attention: General Counsel

Facsimile: (402) 222-5256

If to Western Union, to:

The Western Union Company

100 Summit Avenue

Montvale, New Jersey 07645

Attention: General Counsel

Facsimile: (201) 263-6384

or to such other address as such Party may indicate by a notice delivered to the other Party.

SECTION 15.10 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

 

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SECTION 15.11 Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, including acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

SECTION 15.12 No Public Announcement . Neither First Data nor Western Union 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 the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use their respective 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 SEC disclosure obligations or the rules of any stock exchange.

SECTION 15.13 Termination . Notwithstanding any provisions hereof, this Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution by and in the sole discretion of the Board of Directors of First Data without the prior approval of any Person. In the event of such termination, this Agreement shall forthwith become void and no Party shall have any liability to any Person by reason of this Agreement.

SECTION 15.14 Limited Liability . Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of Western Union or First Data, as applicable, under this Agreement or any Operating Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of Western Union and First Data, for itself and its stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such individual otherwise might have pursuant to applicable law.

SECTION 15.15 Mutual Drafting . This Agreement and the Operating Agreements shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their authorized representatives as of the date first above written.

 

FIRST DATA CORPORATION
By:   /s/ Henry C. Duques
 

Name:    Henry C. Duques

 

Title:      Chief Executive Officer and Chairman of the Board

 

THE WESTERN UNION COMPANY
By:   /s/ Christina A. Gold
 

Name:    Christina A. Gold

 

Title:      Chief Executive Officer and President


SCHEDULES

[Omitted]

Exhibit 10.1

TAX ALLOCATION AGREEMENT

Dated as of September 29, 2006

by and between

FIRST DATA CORPORATION

and

THE WESTERN UNION COMPANY


TAX ALLOCATION AGREEMENT

TAX ALLOCATION AGREEMENT, dated as of September 29, 2006, by and between First Data Corporation, a Delaware corporation (“ FDC ”), and The Western Union Company, a Delaware corporation (“ Western Union ”) and, as of the date hereof, a wholly-owned subsidiary of FDC.

RECITALS

WHEREAS, FDC is the common parent of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), which currently files consolidated federal income Tax Returns;

WHEREAS, FDC, through its subsidiaries, currently provides electronic commerce and payment services throughout the world;

WHEREAS, as described in that certain Separation and Distribution Agreement dated as of the date hereof between FDC and Western Union (the “ Separation Agreement ”), FDC is effecting the separation of certain of its assets and businesses (as defined more fully below, the “ Western Union Businesses ”) on September 29, 2006 (the “ Distribution Date ”) through a series of related transactions (as defined more fully below, the “ Western Union Spin-Off Transactions ”);

WHEREAS, FDC has obtained a private letter ruling from the Internal Revenue Service (the “ IRS ”) dated September 1, 2006 (the “ Tax Ruling ”) and an opinion of Sidley Austin LLP, dated the date hereof (the “ Tax Opinion ”), in each case generally to the effect that, among other things, the Western Union Spin-Off Transactions generally will qualify as tax-free to FDC, FDC stockholders and Western Union under Sections 355, 368 and related provisions of the Code;

WHEREAS, after the Distribution Date, none of the Western Union Parties (as hereinafter defined) will be a member of any federal affiliated group, as defined in Section 1504(a) of the Code, of which FDC or any of its Affiliates is the common parent, or any successor group thereto;

WHEREAS, FDC and Western Union desire, on behalf of themselves, and the FDC Parties (as hereinafter defined) and the Western Union Parties, respectively, and their successors to set forth their rights and obligations with respect to Taxes due for periods before, on and after the Distribution Date; and

WHEREAS, capitalized terms used but not defined herein have the meanings set forth in the Separation Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I

DEFINITIONS

For the purposes of this Agreement:

Affiliate means, with respect to any Person, any person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person.

Agreement means this Tax Allocation Agreement as the same may be amended from time to time.

Anticipated Tax Consequences means the federal income tax consequences described in (1) the enumerated rulings of the IRS set forth in the Tax Ruling and (2) the opinions of counsel set forth in the Tax Opinion.

Applicable Federal Rate means the federal short-term rate set forth in Section 1274(d) of the Code, compounded quarterly.

CESI Holdings ” means CESI Holdings, Inc., a Delaware corporation.

Claim has the meaning set forth in Section 5.03(a) of this Agreement.

Code has the meaning set forth in the first recital to this Agreement.

Control ” (and with correlative meaning, Controlled ”) means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise. Notwithstanding the foregoing, Western Union and FDC shall not be deemed to be under common Control for purposes hereof solely due to the fact that Western Union and FDC indirectly or directly have stockholders in common.

Controlling Party has the meaning set forth in Section 5.01 of this Agreement.

Distributed Companies ” means FDCS Holdings, CESI Holdings, TeleCheck, EBP Re, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, First Data Canada Limited and their respective Subsidiaries (including those formed or acquired after the date hereof).

Distribution Date has the meaning set forth in the third recital to this Agreement.

ECG means E Commerce Group, Inc., a New York corporation.

Effective Time has the meaning set forth in the Separation Agreement.

FDC has the meaning set forth in the preamble to this Agreement.

FDC Businesses means (a) all businesses and operations of the FDC Parties, and (b) the FDC Former Businesses.

 

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FDC Former Businesses ” has the meaning set forth in the Separation Agreement.

FDC Parties means FDC and its Subsidiaries (including those formed or acquired after the date hereof), other than the Western Union Parties.

FDC Tainting Act means, without duplication:

(a) any inaccuracy or breach of any representation, warranty, or covenant that is made by FDC pursuant to Article II of this Agreement; or

(b) any action (or failure to take any reasonably available action) by any of the FDC Parties, their officers, employees or agents, after the Distribution Date (other than an action contemplated by the Separation Agreement).

FDC Tax Certificate means the “First Data Tax Certificate”, dated as of the date hereof, delivered by FDC to Sidley Austin LLP in connection with the Tax Opinion.

FDC Taxes has the meaning set forth in Section 3.03(b) of this Agreement.

FDCS Holdings means First Data Commercial Services Holdings, Inc., a Delaware corporation.

FFMC means First Financial Management Corporation, a Georgia corporation.

Filing Party has the meaning set forth in Section 4.01 of this Agreement.

Final Determination means with respect to any issue (i) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final and not subject to further appeal, (ii) a closing agreement (whether or not entered into under Section 7121 of the Code) or any other binding settlement agreement (whether or not with the IRS) entered into in connection with or in contemplation of an administrative or judicial proceeding, or (iii) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available.

Former Business means any corporation, partnership, entity, division, business unit or business within the definition of Rule 11-01(d) of Regulation S-X (in each case, including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part).

GMT means GMT Group, Inc., a Delaware corporation.

Governmental Authority means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.

 

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Inconsistent Action means any action (or failure to take any action contemplated by the Ruling Request) that is inconsistent with (i) the facts and representations described in, or the representations or other statements made in connection with, the Ruling Request, the Tax Ruling, the FDC Tax Certificate (in the case of FDC) or Western Union Tax Certificate (in the case of Western Union) or the Tax Opinion or (ii) the representations, warranties or covenants in the Transaction Agreements.

Indemnitor has the meaning set forth in Section 5.02 of this Agreement.

Independent Firm has the meaning set forth in Section 7.01 of this Agreement.

IRS has the meaning set forth in the fourth recital to this Agreement.

Liable Party has the meaning set forth in Section 4.01 of this Agreement.

Participation (and, with correlative meaning, Participate ) means, with respect to a Tax Contest and without limitation, (i) receiving timely notice of and attending all material meetings, depositions, hearings and trials (either in person or telephonically) relating to such Tax Contest; (ii) receiving copies of all material correspondence from the relevant Governmental Authority relating to such Tax Contest and (iii) being offered the opportunity to review and comment on all material correspondence to the relevant Governmental Authority relating to such Tax Contest.

Paymap means Paymap Inc., a Delaware corporation.

Person means any individual, corporation, partnership, joint venture, limited liability company, entity, association, joint-stock company, trust, unincorporated organization or Governmental Authority.

Post-Distribution Period means any taxable year or other taxable period beginning after the Distribution Date and, in the case of any taxable year or other taxable period that begins on or before and ends after the Distribution Date, that part of the taxable year or other taxable period that begins at the beginning of the day after the Distribution Date.

Pre-Distribution Period means any taxable year or other taxable period that ends on or before the Distribution Date and, in the case of any taxable year or other taxable period that begins on or before and ends after the Distribution Date, that part of the taxable year or other taxable period through the close of the Distribution Date.

Restructuring Taxes means any Taxes (and other liabilities, including, without limitation, liability for Taxes of stockholders for which Western Union or FDC is determined to be liable and the costs of defending against the imposition of such Taxes and other liabilities) imposed as a result a Final Determination inconsistent with the Anticipated Tax Consequences.

 

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Ruling Request means that certain ruling request of FDC submitted to the IRS on May 12, 2006 (including the exhibits thereto) and any supplements thereto (including exhibits).

Separation Agreement has the meaning set forth in the third recital to this Agreement.

Subsidiary means, when used with reference to any Person, any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or Controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that Person. After the Distribution, FDC and Western Union shall not be deemed to be under common Control for purposes hereof due solely to the fact that FDC and Western Union have common stockholders.

Tax (and, with correlative meaning, “ Taxes ” and “ Taxable ”) means any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental 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, addition to tax or additional amount imposed by any Governmental Authority.

Tax Contest has the meaning set forth in Section 5.01 of this Agreement.

Tax Opinion has the meaning set forth in the fourth recital to this Agreement.

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 or declaration of estimated Tax.

Tax Ruling has the meaning set forth in the fourth recital to this Agreement.

TeleCheck means TeleCheck International, Inc., a Georgia corporation.

Transaction Agreements has the meaning set forth in the Separation Agreement.

Transaction Taxes has the meaning set forth in Section 3.04(b) of this Agreement.

Western Union has the meaning set forth in the preamble to this Agreement.

 

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Western Union Businesses means (a) all businesses and operations of the Western Union Parties and (b) the Western Union Former Businesses.

Western Union Former Businesses has the meaning set forth in the Separation Agreement.

Western Union Parties means Western Union, the Western Union Subsidiaries and any other Subsidiary of Western Union (including those formed or acquired after the date hereof), in each case, other than the Distributed Companies.

Western Union Spin-Off Transactions means the transactions described in the initial Ruling Request under the heading “General Information—Overview of Proposed Transactions—Detailed Description of Transaction—Transaction Steps” (as may have been modified in supplemental submissions to the IRS).

Western Union Subsidiaries means, collectively, ECG, FFMC, GMT, Paymap, WUSI and each Subsidiary of any of the foregoing, in each case, other than the Distributed Companies.

Western Union Tainting Act means, without duplication:

(a) any inaccuracy or breach of any representation, warranty, or covenant that is made by Western Union pursuant to Article II of this Agreement; or

(b) any action (or failure to take any reasonably available action) by any of the Western Union Parties, their officers, employees or agents, after the Distribution Date (other than an action contemplated by the Separation Agreement).

Western Union Tax Certificate means the “Western Union Tax Certificate”, dated as of the date hereof, delivered by Western Union to Sidley Austin LLP in connection with the Tax Opinion.

Western Union Taxes has the meaning set forth in Section 3.03(a) of this Agreement.

WUFSI means Western Union Financial Services, Inc., a Colorado corporation.

WUSI means Western Union Services Inc., a Maryland corporation.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES; COVENANTS

2.01 Representations .

(a) Western Union hereby represents and warrants that (i) as of the Effective Time, none of the Western Union Parties or their officers, employees or agents, (A) knows of any fact (other than a fact set forth in the Ruling Request or the Transaction Agreements) that would jeopardize the Anticipated Tax Consequences; (B) has taken, or has any plan or intention to take, any Inconsistent Action; or (C) has entered into any agreement, understanding, arrangement or substantial negotiation with respect to any direct or indirect acquisition of stock (including, without limitation, stock issuances, option grants, capital contributions, acquisitions, and changes in voting power of any of its stock), or has had any discussions with an investment banker with respect to any public offering of stock, in any case that could reasonably be expected to be part of a “plan (or series of related transactions)” (within the meaning of Section 355(e) of the Code and the Treasury regulations thereunder) that includes the Western Union Spin-Off Transactions, (ii) it has examined (A) the Tax Ruling; (B) the Tax Opinion; (C) all materials relating to the Tax Ruling that were submitted to the IRS; and (D) the Western Union Tax Certificate and any other materials delivered or deliverable by any of the Western Union Parties or their officers, employees or agents in connection with the issuance of the Tax Opinion and the Tax Ruling, and (iii) all facts stated and representations made in the documents referred to in clause (ii), to the extent delivered by, or descriptive of or otherwise relating to, any Western Union Party, were and will be from the time delivered, presented or made through and including the Distribution Date true, correct and complete in all material respects.

(b) FDC hereby represents and warrants that (i) as of the Effective Time, none of the FDC Parties or their officers, employees or agents, (A) knows of any fact (other than a fact set forth in the Ruling Request or the Transaction Agreements) that would jeopardize the Anticipated Tax Consequences; (B) has taken, or has any plan or intention to take, any Inconsistent Action; or (C) has entered into any agreement, understanding, arrangement or substantial negotiation with respect to, or has effected, any direct or indirect acquisition of stock (including, without limitation, stock issuances, option grants, capital contributions, acquisitions, and changes in voting power of any of its stock), or has had any discussions with an investment banker with respect to any public offering of stock, in any case that could reasonably be expected to be part of a “plan (or series of related transactions)” (within the meaning of Section 355(e) of the Code and the Treasury regulations thereunder) that includes the Western Union Spin-Off Transactions, (ii) it has examined (A) the Tax Ruling; (B) the Tax Opinion; (C) all materials relating to the Tax Ruling that were submitted to the IRS; and (D) the FDC Tax Certificate and any other materials delivered or deliverable by any of the FDC Parties or their officers, employees or agents in connection with issuance of the Tax Opinion and the Tax Ruling, and (iii) all facts stated and representations made in the documents referred to in clause (ii), to the extent delivered by, or descriptive of or otherwise relating

 

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to, any FDC Party, were and will be from the time delivered, presented or made through and including the Distribution Date true, correct and complete in all material respects.

2.02 Covenants .

(a) Each of FDC and Western Union covenants and agrees that, following the Distribution Date, none of the Western Union Parties or the FDC Parties, as the case may be, or their officers, employees or agents, will (i) take any Inconsistent Action (including, without limitation, repurchasing any shares of common stock of FDC or Western Union, respectively, except to the extent consistent with the requirements of Revenue Procedure 96-30, failing to continue any active business on which the Anticipated Tax Consequences were based, and voluntarily dissolving, liquidating, merging or consolidating with any other person); (ii) enter into any agreement, understanding, arrangement or substantial negotiations with respect to any direct or indirect acquisition of stock (including, without limitation, stock issuances, option grants, capital contributions, acquisitions, and changes in voting power of any of its stock), or any discussions with an investment bank with respect to any public offering of its stock, in any case that could reasonably be expected to be part of a “plan (or series of related transactions)” (within the meaning of Section 355(e) of the Code and the Treasury regulations thereunder) that includes the Western Union Spin-Off Transactions; (iii) file any request for amendment or supplement to the Tax Ruling without the consent of the other, which consent shall not be unreasonably withheld; or (iv) take any position on a Tax Return that is inconsistent with the Anticipated Tax Consequences.

(b) Notwithstanding the foregoing, either party shall be permitted to take an action inconsistent with Section 2.02(a) if, prior to taking such action, such party (i) provides written notification to the other party of its plans with respect to such action, (ii) promptly responds to any inquiries by the other party following such notification and (iii) unless the other party agrees otherwise in writing, (A) obtains a ruling from the IRS that is reasonably satisfactory to the other party to the effect that, on the basis of facts and representations consistent with the facts at the time of such action, such action will not affect the Anticipated Tax Consequences and (B) obtains an opinion, reasonably satisfactory to the other party, from an independent nationally recognized tax counsel reasonably acceptable to the other party to the effect that, on the basis of facts and representations consistent with the facts at the time of such action, such action will not affect the Anticipated Tax Consequences; provided , that in the case of an action specified in clause (ii) of Section 2.02(a) , if the IRS will not issue a ruling on the grounds that such a ruling is not available under a “no rule”, “comfort ruling” or similar policy, and if such opinion of tax counsel is to the effect that such action will satisfy one or more of the “safe harbors” set forth in Treas. Reg. § 1.355-7(d), as in effect and applicable with respect to such action, the party that delivers such opinion shall be permitted to take such action without obtaining a ruling from the IRS regarding such action, notwithstanding the preceding clause (A) of this Section 2.02(b) .

 

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ARTICLE III

TAX RETURNS, TAX PAYMENTS AND TAX SHARING OBLIGATIONS

3.01 Obligations to File Tax Returns .

(a) FDC shall timely file or cause to be timely filed all Tax Returns with respect to (i) any of the FDC Parties or in respect of any FDC Business and (ii) any of the Western Union Parties or in respect of any Western Union Business that (A) are due on or prior to the Distribution Date or (B) are due after the Distribution Date and (x) relate to any period beginning on or prior to the Distribution Date and (y) are filed on a consolidated, combined or unitary basis with any FDC Party. Western Union shall timely file or cause to be timely filed any other Tax Returns with respect to any Western Union Party or in respect of any Western Union Business. Notwithstanding the foregoing and for the avoidance of doubt, Western Union shall be required to file any IRS Forms 1099 not yet due as of the Distribution Date that report payments made to persons providing services to any Western Union Party, regardless of when such services were provided.

(b) Unless otherwise required by law, any Tax Return that is filed on a consolidated, combined or unitary basis and includes any Western Union Party that is filed by FDC on or after the Distribution Date with respect to a Pre-Distribution Period shall be prepared in a manner consistent with the elections, methods of accounting, positions, conventions and principles of taxation and the manner in which any Tax item or other information is reported as reflected in comparable Tax Returns filed before the date of this Agreement.

(c) Promptly after either FDC or Western Union files a Tax Return after the Distribution Date pursuant to Section 3.01(a) that, in whole or in part, relates to Taxes for which a Western Union Party or a FDC Party, respectively, is liable under this Agreement, FDC or Western Union, as the case may be, shall provide the other with a copy of such Tax Return (including, in the case of a consolidated Tax Return, a copy of the complete Tax Return).

3.02 Obligation To Remit Taxes . Each of FDC and Western Union shall remit or cause to be remitted any Taxes due in respect of any Tax Return that it is required to file or cause to be filed pursuant to Section 3.01 , and shall be entitled to reimbursement for such payments to the extent provided in Section 3.03 .

3.03 Tax Sharing Obligations And Prior Agreements .

(a) From and after the Distribution Date, Western Union shall be liable for and pay, and shall indemnify, defend, and hold harmless FDC and each of the FDC Parties from and against, any and all Losses and Expenses incurred or suffered by FDC or one or more of the FDC Parties in connection with or arising from (i) any Taxes (excluding Restructuring Taxes) that are attributable to or imposed in respect of any of the Western Union Parties, the Western Union Businesses or any employees, assets or transactions of the Western Union Businesses (including any Pre-Distribution Period or

 

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Post-Distribution Period and taking into account the allocation principles of Sections 3.05 and 3.09 ) (“ Western Union Taxes ”) and (ii) any Restructuring Taxes for which Western Union is liable pursuant to Section 3.04 . Any liability of Western Union with respect to any Tax pursuant to this Section 3.03(a) shall be reduced by estimated payments with respect to such Tax previously made to FDC. Western Union shall be entitled to any refund of or credit for Taxes for which Western Union is responsible under this Section 3.03(a) .

(b) From and after the Distribution Date, FDC shall be liable for and pay, and shall indemnify, defend, and hold harmless Western Union and each of the Western Union Parties from and against, any and all Losses and Expenses incurred or suffered by Western Union or one or more of the Western Union Parties in connection with or arising from (i) any Taxes (excluding Restructuring Taxes) that are attributable to or imposed in respect of any of the FDC Parties, the FDC Businesses or any employees, assets or transactions of the FDC Businesses (including any Pre-Distribution Period or Post-Distribution Period and taking into account the allocation principles of Sections 3.05 and 3.09 ) (“ FDC Taxes ”) and (ii) any Restructuring Taxes for which FDC is liable pursuant to Section 3.04 . FDC shall be entitled to any refund of or credit for Taxes for which FDC is liable under this Section 3.03(b) .

(c) To the extent that any fees, costs or expenses paid by one party pursuant to Section 11.1 of the Separation Agreement provide a Tax benefit to the other party during any Post-Distribution Period, the party receiving such Tax benefit shall remit to the paying party the amount of such benefit, net of any reasonable third-party out-of-pocket costs incurred to determine the amount of such benefit, for all affected taxable years or periods, with the amount of such benefit mutually determined by the parties using reasonable assumptions (for example, as to the timing of the benefits and the federal and state income tax rates applicable in determining the amount of such benefits) and present value concepts. For the avoidance of doubt, no amount shall be due or owing by any of the FDC Parties to any Western Union Party with respect to any Tax benefit recognized by any of the FDC Parties relating to, or arising from, the exercise of Western Union options (or vesting of Western Union restricted stock) by any current or former employee of, or other party providing services to, any FDC Party.

(d) This Agreement and the Separation Agreement (and, to the extent relevant, the other Transaction Agreements) shall, from and after the Distribution Date, constitute the sole agreements governing tax matters among the FDC Parties and the Western Union Parties, and except as set forth in such Agreements any and all prior Tax sharing agreements or practices between any of the FDC Parties, on the one hand, and any of the Western Union Parties, on the other hand, shall be terminated as of the Distribution Date.

 

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3.04 Restructuring Taxes; Other Taxes Relating To The Western Union Spin-Off Transactions .

(a) Subject to Section 3.04(b) , FDC shall be liable for all Restructuring Taxes other than Restructuring Taxes that are imposed solely as a result of a Western Union Tainting Act, for which Western Union shall be liable.

(b) Notwithstanding Section 3.04(a) , each of Western Union and FDC shall be liable for fifty percent (50%) of Restructuring Taxes (i) that would not have been imposed but for the existence of both a Western Union Tainting Act and an FDC Tainting Act, or (ii) where both a Western Union Tainting Act and an FDC Tainting Act occur, and each of the Western Union Tainting Act and the FDC Tainting Act, standing alone, would have resulted in the imposition of such Restructuring Taxes.

(c) FDC shall determine the amount of sales, transfer, value added or other similar taxes or fees (including, without limitation, all real estate, patent, copyright and trademark transfer taxes and real estate recording fees but excluding patent, copyright, and trademark recording fees and Restructuring Taxes) payable in connection with the Western Union Spin-Off Transactions (the “ Transaction Taxes ”). Each of FDC and Western Union shall timely file (or cause to be timely filed) with the appropriate taxing authorities the Tax Returns relating to such Transaction Taxes required under applicable Tax law to be filed by it, and shall remit (or cause to be remitted) payment of the Transaction Taxes due in respect of any such Tax Return. Transaction Taxes shall be the liability of the party that is primarily liable therefor under applicable Tax law.

3.05 Period That Includes The Distribution Date .

(a) To the extent permitted by law or administrative practice, the taxable year of the Western Union Parties shall be treated for all federal, state and local tax purposes as closing at the close of the Distribution Date, and all Tax computations resulting therefrom shall be made pursuant to the principles of Treasury Regulation Section 1.1502-76(b) or a corresponding provision under the laws of an applicable state, local or foreign jurisdiction.

(b) If it is necessary for purposes of this Agreement to determine the liability for Taxes for a taxable year that begins on or before and ends after the Distribution Date and is not treated under Section 3.05(a) as closing at the close of the Distribution Date, the determination shall be made by assuming that such taxable year ended on a “closing of the books” basis at the close of the Distribution Date pursuant to the principles of Treasury Regulation Section 1.1502-76(b), except that exemptions, allowances or deductions that are calculated on an annual basis (such as property taxes) shall be apportioned on a daily basis.

3.06 Allocation Of Tax Items . In completing any Tax Returns to be filed or caused to be filed by FDC or Western Union under Section 3.01 , Tax items (including, but not limited to, net operating losses and net capital losses) shall be allocated to the entity the operations of which produced such Tax items, in each case unless otherwise prohibited by the

 

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relevant Governmental Authority. Except as provided in Section 3.07 , it is agreed and understood that neither FDC nor Western Union shall be obligated to make any compensating payments for the use of Tax attributes of the other party (or any Affiliate thereof) in any Pre-Distribution Period, including, for the avoidance of doubt, the use of foreign tax credits, net operating losses, net capital losses or the limitation described in Section 904(a) of the Code, whether in an originally filed Tax Return, an amended Tax Return or by reason of a carryback of any such item to a Pre-Distribution Period.

3.07 Carryback Provisions . Without the consent of FDC (such consent not to be unreasonably withheld), no Western Union Party shall carry back a loss, credit, or similar Tax attribute (unless required to carry back such Tax attribute by law) from a Post-Distribution Period to a Pre-Distribution Period during which any of the Western Union Parties joined in filing a Tax Return on a consolidated, combined, or unitary basis with one or more of the FDC Parties. If FDC consents to the carryback or if the carryback is required by law, FDC shall, at Western Union’s expense, file appropriate refund claims within a reasonable period after being requested by Western Union and promptly remit to Western Union any refunds received with respect to any Tax attribute so carried back.

3.08 Amended Returns . Western Union shall not, and shall not permit any Western Union Party to, amend any Pre-Distribution Period Tax Return originally filed on a consolidated, combined, or unitary basis with one or more of the FDC Parties without first obtaining the consent of FDC, which consent shall not be unreasonably withheld.

3.09 Allocation of Tax Liability . The portion of any Tax liability for any Pre-Distribution Period (other than Restructuring Taxes) determined on a combined, consolidated or unitary basis with respect to a group of corporations including one or more Western Union Parties, on the one hand, and one or more FDC Parties, on the other hand, that constitutes Western Union Taxes shall be determined on a separate company basis for all Western Union Parties consistent with the methodology previously used in making such determination for purposes of the pro forma Tax Returns and separate audited financial statements of WUFSI.

ARTICLE IV

PAYMENTS

4.01 General Tax Payments . With respect to any Taxes for which one party (the “ Liable Party ”) is liable under Section 3.03 and that are to be remitted in connection with Tax Returns to be filed by the other party (the “ Filing Party ”) after the Distribution Date pursuant to Sections 3.01 and 3.02 , (i) upon the request of the Filing Party, the other party shall promptly provide to the Filing Party all information within the possession of the Liable Party and necessary to enable the Filing Party to file such Tax Returns and (ii) assuming compliance by the Liable Party with the Liable Party’s obligations under clause (i) (or written waiver by the Filing Party of such compliance), the Filing Party shall, not later than seven (7) days prior to the due date for remitting such Taxes (or, if the due date is within seven (7) days after the Distribution Date, as promptly following the Distribution Date as possible) provide the Liable Party with a written request showing in reasonable detail the calculation of the amount of Taxes

 

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(and any other amounts) owing by the Liable Party to the Filing Party pursuant to this Agreement. The Liable Party shall have the right to object in writing to such calculation on or before three (3) days after the date on which such request is provided to the Liable Party, on the grounds that there is “substantial authority” (within the meaning of Section 6662 of the Code and the Treasury regulations thereunder) for the position that the Liable Party is claiming to be the correct position and, if the Liable Party provides the Filing Party with an opinion to such effect within two (2) days after such written objection, reasonably satisfactory to the Filing Party, from an independent nationally recognized tax counsel reasonably acceptable to the Filing Party, the relevant Tax Return and the amount owing by the Liable Party shall be adjusted in a manner consistent with such opinion. Absent an objection pursuant to the preceding sentence (or absent such an opinion), the Liable Party shall pay to the Filing Party any amount not in dispute on or before the day preceding the date such Tax is due (or, if earlier, the date identified in a notice delivered by the Filing Party on which the Filing Party intends to pay, and does pay, such tax) with additional amounts to be paid by the Liable Party (together with interest at the Applicable Federal Rate accruing from the date on which such Tax Return is filed) promptly upon resolution of any objection.

4.02 Other Payments . Other payments due to a party under Section 3.03 shall be paid by the Liable Party not later than thirty (30) days after the receipt or crediting of a refund or the receipt of notice of a Final Determination to the effect that the indemnified party is liable for an indemnified cost, together with interest at a rate equal to the Applicable Federal Rate from the date on which the indemnifying party receives such receipt, credit or notice.

4.03 Notice . FDC and Western Union shall give each other prompt written notice of any payment that may be due under this Agreement.

ARTICLE V

TAX AUDITS

5.01 General . Except as otherwise provided in this Agreement, each of Western Union and FDC (as the case may be, the “ Controlling Party ”) shall have sole responsibility for and control over all Tax inquiries, audits, examinations, investigations, disputes, litigation or other proceedings (each, a “ Tax Contest ”) involving a Tax for which it is liable pursuant to Article III of this Agreement (in all cases, at its own expense); provided , that FDC and Western Union shall each have the right to Participate (at its own expense) in any Tax Contest to the extent it relates to Taxes determined on a consolidated, combined or unitary basis if any FDC Party or Western Union Party, respectively, is a member of the consolidated, combined or unitary group to which such Taxes relate. In the case of a Tax Contest involving Taxes for which each of FDC and Western Union would be liable pursuant to Article III of this Agreement, the parties agree to use reasonable best efforts to separate the issues for resolution, in which case the party that would be liable for any Tax relating to each issue will be the Controlling Party with respect to that issue. To the extent the issues cannot be separated, the party that would bear the majority of the liability if all issues were resolved unfavorably shall be the Controlling Party. If the Controlling Party relinquishes in writing its responsibility for and control over a Tax Contest or, in the reasonable opinion of the non-Controlling Party, is not

 

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prosecuting a Tax Contest in a manner reasonably satisfactory to the non-Controlling Party, then the non-Controlling Party may (at its own expense) elect to take over the prosecution and resolution of such Tax Contest, it being understood that the election by a non-Controlling Party to take over the prosecution and resolution of a Tax Contest shall not limit in any way any rights to indemnification that the non-Controlling Party may have under the terms of this Agreement with respect to any Taxes imposed in connection with such Tax Contest.

5.02 Indemnified Claims In General . FDC or Western Union shall promptly notify the other in writing upon the receipt of a notice of assessment by the relevant Government Authority of an adjustment to a Tax Return that (i) may result in liability of the other party (the “ Indemnitor ”) under this Agreement or (ii) could reasonably be expected to have a material effect on the Tax Liability of the other party for any Post-Distribution Period. If the Indemnitor (or such other party) is not also the Controlling Party (as determined under Section 5.01 ), the Controlling Party shall provide the Indemnitor (or such other party) with all information within the possession of the Controlling Party about the nature and amounts of the proposed adjustments and, subject to additional rights of the Indemnitor (or such other party) in certain circumstances under Section 5.03 or Section 5.04 of this Agreement, shall permit the Indemnitor (or such other party) to Participate in the Tax Contest at the Indemnitor’s (or such other party’s) own expense. The Controlling Party shall not be required to indemnify the Indemnitor (or such other party) if the Controlling Party fails to notify or provide such information to the Indemnitor (or such other party) unless the Indemnitor (or such other party) is materially prejudiced by such failure and, in any such case, the Controlling Party shall be required to indemnify only to the extent of such prejudice.

5.03 Certain Tax Claims .

(a) Any issue raised by a Governmental Authority in any Tax Contest with respect to which the Indemnitor is not the Controlling Party that could result in liability to the Indemnitor under this Agreement is defined as a Claim (a “ Claim” ). The Controlling Party shall provide notice to Indemnitor pursuant to Section 5.02 of any such Claim. Except as provided in Section 5.03(d) and notwithstanding any other provision of this Agreement that may be construed to the contrary, the Controlling Party agrees to contest any Claim and not to settle any Claim without prior written consent of the Indemnitor, if within thirty (30) days after the notice described in Section 5.02 is received by the Indemnitor, (i) the Indemnitor requests in writing that such Claim be contested and (ii) the Indemnitor agrees in writing to pay on demand all out-of-pocket costs, losses and expenses (including, but not limited to, legal and accounting fees) paid or incurred by the Controlling Party in connection with contesting such Claim. The Controlling Party, after reasonable consultation with the Indemnitor, shall determine in the Controlling Party’s sole discretion the nature of all actions to be taken to contest such Claim, including, without limitation, (x) whether any action to contest such Claim shall initially be by way of judicial or administrative proceeding, or both, (y) whether any such Claim shall be contested by resisting payment thereof or by paying the same and seeking a refund thereof, and (z) the court or other judicial body before which judicial action, if any, shall be commenced. To the extent the Indemnitor does not Participate in the Tax Contest, the

 

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Controlling Party shall keep the Indemnitor (and, upon request by the Indemnitor, its counsel) informed as to the progress of the Tax Contest with respect to any Claim.

(b) If the Indemnitor requests that the Controlling Party accept a settlement of a Claim offered by the relevant Governmental Authority and if such Claim may, in the reasonable discretion of the Controlling Party, be settled without prejudicing any claims the relevant Governmental Authority may have with respect to matters unrelated to the Claim, the Controlling Party shall either accept such settlement offer or agree with the Indemnitor that the Indemnitor’s liability with respect to such Claim shall be limited to the lesser of (i) an amount related to such Claim calculated on the basis of such settlement offer plus (without duplication) interest and any penalties owed to the relevant Governmental Authority on the date of eventual payment or (ii) the amount related to such Claim calculated on the basis of a Final Determination.

(c) If, after consultation with the Indemnitor, the Controlling Party shall elect to pay the Tax claimed pursuant to a Claim and seek a refund, the Indemnitor shall provide sufficient funds to the Controlling Party (with no net after-Tax cost to the Controlling Party) to cover any applicable indemnity obligations of the Indemnitor. To the extent such refund claim is ultimately disallowed, the amount provided by the Indemnitor or portion thereof equal to the amount of the refund claim so disallowed shall be applied against the Indemnitor’s obligation to make indemnity payments pursuant to this Agreement. To the extent such refund claim is allowed, the Controlling Party shall pay to the Indemnitor all amounts provided to the Controlling Party with respect to the indemnity obligation within ten (10) days of the receipt of such refund (or if the Controlling Party would have received such refund but for the existence of a counterclaim or other claim not indemnified by the Indemnitor under this Agreement, within ten (10) days of the final resolution of the contest), plus an amount equal to any interest received (or that would have been received) from the relevant Governmental Authority that is properly attributable to such amount.

(d) Except as provided below, the Controlling Party shall not settle a Claim that the Indemnitor is entitled to require the Controlling Party to contest under Section 5.03(a) without the prior written consent of the Indemnitor, which consent may not be unreasonably withheld. At any time, whether before or after commencing to take any action pursuant to this Section 5.03 with respect to any Claim, the Controlling Party may decline to take action with respect to such Claim and may settle such Claim without the prior written consent of the Indemnitor by notifying the Indemnitor in writing that the Indemnitor is released from its obligations to indemnify the Controlling Party with respect to such Claim (which notification shall release the Indemnitor from such obligations except to the extent the Indemnitor has agreed in writing that it would be willing to have its liability calculated on the basis of a settlement offer, as provided in Section 5.03(b) , at that point in the contest) and with respect to any Claim related to such Claim or based on the outcome of such Claim. If the Controlling Party settles any Claim or otherwise takes or declines to take any action pursuant to this paragraph, the Controlling Party shall pay to the Indemnitor any amounts paid or advanced by the Indemnitor with respect to such Claim (other than amounts payable by the Indemnitor in

 

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connection with a settlement offer pursuant to Section 5.03(b) ), plus interest attributable to such amounts.

5.04 Certain Other Tax Claims .

(a) Notwithstanding anything herein to the contrary, the Controlling Party with respect to any issue arising in a Tax Contest agrees not to settle (or take any other action with respect to) such Tax Contest, to the extent such settlement (or other action) could reasonably be expected to have a material adverse effect on the Tax liability of the non-Controlling Party for any Post-Distribution Period, without the consent of the non-Controlling Party, which consent shall not be unreasonably withheld.

(b) Without limiting the foregoing, in the event that Western Union is the Controlling Party with respect to a Tax Contest involving a Tax Return for any Pre-Distribution Period filed on a consolidated, combined or unitary basis with one or more of the FDC Parties, then Western Union must consult in good faith with FDC before taking any course of action with respect to such Tax Contest that could reasonably be expected to have a material adverse effect on any FDC Party, including, without limitation, any course of action that would result in a material extension of the period during which the taxable year or period to which such Tax Contest relates remains subject to further audit or examination by any Governmental Authority. If any such material adverse effect on any FDC Party could reasonably be expected to occur, Western Union agrees to take all reasonable steps, as requested by FDC, to mitigate the adverse effect, including, without limitation, (i) severing the issue with respect to which Western Union is the Controlling Party from any remaining issues in the Tax Contest to the extent administratively or legally possible or (ii) requesting “fast track” or similar administrative appeals.

(c) Without limiting the foregoing, in the event that FDC is the Controlling Party with respect to a Tax Contest involving a Tax Return for any Pre-Distribution Period filed on a consolidated, combined or unitary basis with one or more of the Western Union Parties, then FDC must consult in good faith with Western Union before taking course of action with respect to such Tax Contest that could reasonably be expected to have a material adverse effect on any Western Union Party, including, without limitation, any course of action that would result in a material extension of the period during which the taxable year or period to which such Tax Contest relates remains subject to further audit or examination by any Governmental Authority. If any such material adverse effect on any Western Union Party could reasonably be expected to occur, FDC agrees to take all reasonable steps, as requested by Western Union, to mitigate the adverse effect, including, without limitation, (i) severing the issue with respect to which FDC is the Controlling Party from any remaining issues in the Tax Contest to the extent administratively or legally possible or (ii) requesting “fast track” or similar administrative appeals.

 

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ARTICLE VI

COOPERATION; RECORD RETENTION

6.01 General . In addition to any obligations imposed pursuant to the Separation Agreement (including, without limitation, those specified in Section 14.7 of the Separation Agreement), FDC and Western Union shall cooperate with each other in the filing of any Tax Returns and the conduct of any Tax Contest and each shall execute and deliver such powers of attorney and make available such other documents as are reasonably necessary to carry out the intent of this Agreement. Each party agrees to notify the other party in writing of any audit adjustments that do not result in Tax liability but could reasonably be expected to affect Tax Returns of the other party or its Affiliates for a Post-Distribution Period.

6.02 Cooperation With Respect To Tax Return Filings, Examinations And Tax Related Controversies . In addition to any obligations imposed pursuant to the Separation Agreement (including, without limitation, those specified in Section 14.7 of the Separation Agreement), each party shall fully cooperate (and shall cause its Affiliates to fully cooperate) with the other party (or its Affiliates) and its representatives, in a prompt and timely manner, in connection with (i) the preparation and filing of any Tax Return required to be filed by such other party pursuant to Article III and (ii) any Tax Contest with respect to which such other party is the Controlling Party or a Participant. Such cooperation shall include, but shall not be limited to, (x) the execution and delivery to such other party any reasonably requested powers of attorney, (y) making available to such other party, during normal business hours, and within fifteen (15) days of any written request therefor, (A) all relevant books, records and information, (B) the assistance of all officers and employees and (C) access to any software, files or other data necessary to complete any Tax Return, in each case, to the extent reasonably requested. Specifically in regard to clause (B) of the preceding sentence (and without limiting the foregoing), it is the mutual intent of both parties that the income tax compliance personnel of Western Union shall continue after the Distribution Date, to the extent reasonably requested by FDC, to perform their Pre-Distribution Period duties and responsibilities associated with the preparation and filing of all federal, state or local income Tax Returns that (i) relate to any period beginning on or prior to the Distribution Date, (ii) are due after the Distribution Date, and (iii) are filed on a consolidated, combined or unitary basis involving one or more Western Union Parties and one or more FDC Parties.

6.03 Record Retention; Data Access . In addition to any obligations imposed pursuant to the Separation Agreement (including, without limitation, those specified in Section 14.7 of the Separation Agreement), FDC and Western Union shall (i) in accordance with their then current record retention policy, retain records, documents, accounting data and other information (including, without limitation, computer data) necessary for the preparation and filing of all Tax Returns in respect of Taxes of any FDC Party or any Western Union Party for any Pre-Distribution Period or any Post-Distribution Period or for the audit of such Tax Returns; and (ii) give to the other reasonable access to such records, documents, accounting data and other information (including, without limitation, computer data) and to its personnel (insuring their cooperation) and premises, for the purpose of the review or audit of such Tax Returns to the extent relevant to an obligation or liability of a party under this Agreement or for purposes

 

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of the preparation or filing of any such Tax Return, the conduct of any Tax Contest or any other matter reasonably and in good faith related to the Tax affairs of the requesting party. If at any time after the Distribution Date a Western Union Party proposes to destroy such material or information relating to an FDC Party, it shall first notify FDC in writing and FDC shall be entitled to receive such materials or information proposed to be destroyed. If at any time after the Distribution Date an FDC Party proposes to destroy such material or information relating to a Western Union Party, it shall first notify Western Union in writing and Western Union shall be entitled to receive such materials or information proposed to be destroyed.

6.04 Confidentiality . For the avoidance of doubt, to the extent applicable, the obligations imposed pursuant to the Separation Agreement (including, without limitation, those specified in Section 14.8 of the Separation Agreement) with respect to confidentiality shall apply with respect to any information relating to Tax matters.

ARTICLE VII

DISPUTES

If FDC and Western Union cannot agree on the calculation of any liability under this Agreement, or the interpretation or application of any provision under this Agreement, either party may provide to the other party written notice of intent to invoke the dispute resolution procedures of this Article VII . Within ten (10) days following the receipt of such written notice, FDC and Western Union shall jointly retain a nationally recognized law firm or “big four” accounting firm, which firm is independent of both parties (the “ Independent Firm ”), to resolve the dispute. If the parties cannot jointly agree on an Independent Firm to resolve the dispute within the ten (10) day period, then within a period of an additional ten (10) days, each party shall select a nationally recognized law firm or “big four” accounting firm, which firm is independent of both parties, and those firms shall jointly select an Independent Firm which shall make the determination under this Article VII . The Independent Firm shall act as an arbitrator to resolve all points of disagreement and its decision shall be final and binding upon all parties involved. The Independent Firm shall determine the appropriate outcome based upon this Agreement with respect to each disputed item. The Independent Firm shall make such determinations by the earlier of (i) ninety (90) days from the date that it is selected and (ii) ten (10) days prior to the date on which response with respect to a disputed item is due to the relevant Governmental Authority, unless FDC and Western Union mutually agree on an extension of such period or the Independent Firm, in its discretion, determines that an extension of such period is warranted by exceptional circumstances; provided , that in all events, such determination shall be made no later than five (5) days prior to the date on which response with respect to a disputed item is due to the relevant Governmental Authority. FDC and Western Union shall provide the Independent Firm with such information or documentation as the Independent Firm deems in its discretion to be necessary for it to make the determinations requested of it. Any determination by the Independent Firm shall be in writing. Following the decision of the Independent Firm, FDC and Western Union shall each take or cause to be taken any action necessary to implement the decision of the Independent Firm. The fees and expenses relating to the Independent Firm shall be borne by the party that such Independent Firm determines has lost the dispute. In all other events, the fees and expenses relating to the

 

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Independent Firm shall be shared based on the difference between the FDC’s position, on the one hand, and Western Union’s position, on the other hand, initially presented to the Independent Firm (based on the aggregate of all differences taken as a whole) and the final resolution as determined by the Independent Firm in proportion to the total difference between FDC’s and the Western Union’s initial positions.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

8.01 Entire Agreement . This Agreement embodies the entire understanding between the parties relating to its subject matter and supersedes and terminates all prior agreements and understandings, if any, among the parties with respect to such subject matter. No promises, covenants or representations of any kind, other than those expressly stated herein, have been made to induce any party to enter into this Agreement. This Agreement shall not be modified or terminated except by a writing duly signed by each of the parties hereto, and no waiver of any provisions of this Agreement shall be effective unless in a writing duly signed by the party sought to be bound. If, and to the extent that, the provisions of this Agreement conflict with the Separation Agreement, or any other agreement entered into in connection with the Western Union Spin-Off Transactions, the provisions of this Agreement shall control.

8.02 Survival . Notwithstanding any provision in this Agreement to the contrary, the provisions of this Agreement shall survive until the expiration of any applicable statute of limitations; provided , that any liabilities determined under this Agreement shall survive indefinitely.

8.03 Headings . All headings contained in this Agreement are for convenience only and shall not be deemed a part of this Agreement.

8.04 Severability . If any provision of this Agreement or the application of any such provision to any person or circumstances shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

8.05 Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

8.06 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 Delaware.

8.07 Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

8.08 Notices . Any payment, notice or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when

 

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delivered personally, (ii) if transmitted by facsimile (or other electronic means), when confirmation of transmission is received, or (iii) if sent by registered or certified mail, return receipt requested, or by private courier, when received. Any notice shall be addressed as follows:

If to FDC, to it at:

First Data Corporation

6200 South Quebec Street, Suite 430

Greenwood Village, Colorado 80111

Attention: Senior Vice President, Tax

Facsimile: (303) 967-7303

If to Western Union, to it at:

The Western Union Company

12500 East Belford Avenue, Mailstop M23B7

Englewood, Colorado 80112

Attention: Senior Vice President, Tax

Facsimile: (720) 332-0609

8.09 No Third-Party Beneficiaries . Nothing in this document shall be deemed to create any right in any person not a party hereto and this instrument shall not be construed in any respect to be a contract in whole or in part for the benefit of any third party except as aforesaid.

8.10 Mutual Drafting . This Agreement shall be deemed to be the joint work product of FDC and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their authorized representatives as of the date first above written.

 

FIRST DATA CORPORATION
By:   /s/ Kimberly S. Patmore
  Name:   Kimberly S. Patmore
  Title:   Executive Vice President and Chief Financial Officer

 

THE WESTERN UNION COMPANY
By:   /s/ David G. Barnes
  Name:   David G. Barnes
  Title:   Executive Vice President Finance and Strategic Development

Exhibit 10.2

EMPLOYEE MATTERS AGREEMENT

THIS EMPLOYEE MATTERS AGREEMENT is made as of September 29, 2006 between First Data Corporation, a Delaware corporation (“ First Data ”), and The Western Union Company, a Delaware corporation (“ Western Union ”) and, as of the date hereof, a wholly-owned subsidiary of First Data.

RECITALS

A. First Data and Western Union have entered into a Separation and Distribution Agreement dated as of September 29, 2006 (the “ Distribution Agreement ”) pursuant to which First Data will distribute on a pro rata basis to the holders of First Data’s Common Stock, $0.01 par value per share (“ First Data Common Stock ”), without any consideration being paid by the holders of such First Data Common Stock, all of the outstanding shares of Western Union’s Common Stock, $0.01 par value per share (“ Western Union Common Stock ”) then owned by First Data (the “ Distribution ”).

B. In connection with the Distribution, First Data and Western Union desire to enter into this Employee Matters Agreement.

In consideration of the mutual promises contained herein and in the Distribution Agreement, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01 Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Distribution Agreement. As used in this Agreement:

Agreement ” means this Employee Matters Agreement together with those parts of the Distribution Agreement referenced herein and all Schedules hereto and all amendments, modifications and changes hereto and thereto.

Business Employee ” means a Transferred Employee or any other individual employed at any time on or prior to the Distribution Date by Western Union or any of its Subsidiaries or Affiliates who has, as of the Distribution Date, or who, immediately prior to his or her termination of employment with all of First Data, its Subsidiaries and their respective Affiliates, had employment duties primarily related to the Transferred Business.

COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at Section 4980B of the Code, as amended.

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

Domestic Business Employee ” means a Business Employee who is located in the United States or who is an expatriate Business Employee employed by a Western Union U.S.


entity but who is performing services outside of the United States for a temporary period of time at the request of his employer.

ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1001, et . seq .

First Data Non-ERISA Benefit Arrangement ” means any Non-ERISA Benefit Arrangement sponsored or maintained by First Data.

First Data Plan ” means any Pension Plan or Welfare Plan sponsored or maintained by First Data.

IRS ” means the U.S. Internal Revenue Service.

Non-Domestic Business Employee ” means a Business Employee who is located outside the United States or who is an inpatriate Business Employee in the U.S. employed by a Western Union Non-U.S. entity but who is performing services in the United States for a temporary period of time at the request of his employer.

Non-ERISA Benefit Arrangement ” means any contract, agreement, policy, practice, program, plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for benefits, perquisites or compensation of any nature to any Business Employee, or to any family member, dependent or beneficiary of any such Business Employee, including, without limitation, disability, severance, health, dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or bereavement days, holidays, retirement, deferred compensation, profit sharing, bonus, stock-based compensation or other forms of incentive compensation.

Pension Plan ” means any pension plan as defined in Section 3(2) of ERISA, without regard to Section 4(b)(4) or 4(b)(5) of ERISA.

Transferred Employee ” means an employee of First Data or any First Data Subsidiary (other than Western Union or any Western Union Subsidiary) whose employment is transferred to Western Union immediately prior to the Distribution Date.

Welfare Plan ” means any employee welfare plan as defined in Section 3(1) of ERISA, without regard to Section 4(b)(4) or 4(b)(5) of ERISA.

1.02 In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) references to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;

(c) references to any gender includes the other gender;


(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) references to any Article, Section or Schedules means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(f) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;

(g) references to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(h) references to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(i) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(j) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;

(k) if there is any conflict between the provisions of the Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof; if there is any conflict between the provisions of the body of this Agreement and the Schedule hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(l) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(m) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Affiliates to take such action or refrain from taking such action, as the case may be; and

(n) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.


ARTICLE II

ASSIGNMENT OF EMPLOYEES

Effective immediately prior to the Distribution Date, the employment of the Transferred Employees by First Data shall be terminated and thereupon shall commence with and shall be assigned and transferred to Western Union or a Western Union Subsidiary. Notwithstanding anything set forth below or herein to the contrary, nothing in this Agreement shall create any obligation on the part of any Western Union Party to continue the employment of any employee for any definite period following the Distribution Date or to change the employment status of any employee from “at will.” Notwithstanding the foregoing, if and only to the extent necessary to preserve payroll, benefits, or other legal entitlements with respect to employees outside the United States, a Western Union Party and a First Data Party may enter into one or more agreements whereby such Party may lease employees from the other company or its Subsidiary for a period of not more than three calendar months following the Distribution Date. Any such agreement(s) shall require the company benefiting from the services of such employee(s) to fully reimburse the leasing company for the full cost of the employee(s) remuneration and shall contain other terms and conditions consistent with an arm’s length commercial relationship between the leasing entity and the service recipient.

ARTICLE III

PENSION PLANS

3.01 U.S. Defined Contribution Plans.

(a) Western Union ISP.

(1) Establishment of Western Union Company Incentive Savings Plan. On or before, but effective as of the close of business on the Distribution Date, Western Union shall adopt, establish and maintain a 401(k) profit sharing Pension Plan and trust intended to be qualified under Section 401(a) of the Code and exempt from federal income tax under Section 501(a) of the Code (the “ Western Union ISP ”). As soon as practicable after the adoption of the Western Union ISP, Western Union shall submit an application for determination to the IRS for a determination that the Western Union ISP is qualified under Section 401(a) of the Code and that the related trust is exempt from federal income tax under Section 501(a) of the Code, and shall take any actions not inconsistent with Western Union’s other general commitments contained in this Agreement and make any amendments necessary to receive such determination.

(2) Transfer of Account Balances and Unallocated Amounts. As soon as administratively practicable after the Distribution Date, there shall be transferred from the First Data Corporation Master Trust for Defined Contribution Plans (“ DC Master Trust ”) to the trust established by Western Union for the Western Union ISP assets having a value as of the applicable valuation date that are equal to the value of the account balances of, and liabilities with respect to, all Business Employees (other than Business Employees whose employment has


terminated prior to the Distribution Date and other than Business Employees located in Puerto Rico) with an account balance under the First Data Corporation Incentive Savings Plan (“ First Data ISP ”) as of such valuation date. In addition, as soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the trust established by Western Union to hold Western Union ISP assets a pro rata share of all unallocated amounts held in the DC Master Trust (other than unallocated forfeitures attributable to the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees), determined based upon the ratio of the sum of the account balances of the Business Employees described in the immediately preceding sentence as of the applicable valuation date to the sum of all account balances held in the DC Master Trust as of such valuation date. Such transferred assets shall be in cash, shares of securities, promissory notes evidencing outstanding plan loans of such Business Employees, and shares of First Data Common Stock and Western Union Common Stock, and such transfer shall be made in accordance with Section 414(l) of the Code. Liabilities under any qualified domestic relations orders (as defined in Section 414(p) of the Code) received with respect to any accounts transferred to the Western Union ISP shall be transferred to and assumed by the Western Union ISP at the time such assets attributable to such accounts are transferred. Western Union shall assume and thereafter be solely responsible for all then existing and future employer liabilities related to such Business Employees under the Western Union ISP and the administration thereof, and the First Data Parties shall have no liability therefor.

(b) Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees. Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees (the “ RSP ”). As soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the trust established by Western Union Financial Services, Inc. (or its designee) for the RSP assets (the “ RSP Trust ”) having a value as of the applicable valuation date that are equal to the value of the account balances of, and liabilities with respect to, the RSP as of such valuation date. In addition, as soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the RSP Trust all unallocated forfeitures attributable to the RSP as well as a pro rata share of all other unallocated amounts held in the DC Master Trust, determined based upon the ratio of the sum of the account balances of the RSP as of the applicable valuation date to the sum of all account balances held in the DC Master Trust as of such valuation date. Following the date of such asset transfer, the First Data Parties shall have no liability relating to the RSP.

(c) Western Union Pension Plan and Western Union Financial Services, Inc. Pension Plan. Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Pension Plan and the Western Union Financial Services, Inc. Pension Plan. As soon as administratively practicable after the Distribution Date, there shall be retitled in the name of the Western Union Master Pension Trust as established by Western Union Financial Services, Inc. (or its designee) assets having a value as of the applicable valuation date that are equal to the


value of the accrued benefits of, and liabilities with respect to, the Western Union Pension Plan and the Western Union Financial Services, Inc. Pension Plan as of such valuation date, as determined by First Data and Western Union. Following the date of the transaction contemplated in the immediately preceding sentence, the First Data Parties shall have no liability arising out of or otherwise with respect to the Western Union Pension Plan or the Western Union Financial Services, Inc. Pension Plan.

3.02 Supplemental Non-Qualified Deferred Compensation Plan. On or before, but effective as of the close of business on Distribution Date, Western Union shall adopt a non-qualified deferred compensation plan (the “ Western Union Supplemental Incentive Savings Plan ”). Western Union shall assume, and shall cause the Western Union Supplemental Incentive Savings Plan to assume, responsibility for all liabilities and fully perform, pay and discharge all obligations, when such obligations become due, to the Business Employees under the First Data Corporation Supplemental Incentive Savings Plan (“ SISP-1 and SISP-2 ”) immediately prior to the Distribution Date. Following such date, the First Data Parties shall have no liability arising out of or otherwise with respect to the SISP-1 and SISP-2.

3.03 Non-U.S. Retirement Plans. Following the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries to continue to maintain in full force and effect retirement plans as were sponsored and maintained by such Subsidiaries immediately prior to the Distribution Date, and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants or former participants in such plans with respect to their participation therein. In addition, effective either prior to or as of the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries in the United Kingdom, Japan, Canada, and Australia to adopt retirement plans with appropriate eligibility and benefits terms to ensure that Non-Domestic Business Employees in such countries are either (1) eligible to participate in the same type of plan and enjoy the same level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), or (2) eligible to participate in a plan intended to provide a comparable level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier).

ARTICLE IV

WELFARE PLANS

4.01 Western Union Financial Services, Inc. Health and Welfare Benefit Plan. Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Financial Services, Inc. Health and Welfare Benefit Plan, and the First Data Parties shall have no liability relating to such plan. The Western Union Financial Services, Inc. Health and Welfare Benefit Plan covers only collectively bargained employees. As of the date of this Agreement, all eligible non-union Domestic Business Employees participate in the First Data Corporation Health and Welfare Benefit Plan.


4.02 Continued Participation in First Data U.S. Welfare Plans; Establishment of Separate U.S. Welfare Plan Contracts. For the period beginning at the close of business on the Distribution Date and ending as of 11:59 p.m. on December 31, 2006, all eligible non-union Domestic Business Employees shall continue to be eligible to participate in the First Data Corporation Health and Welfare Benefit Plan. First Data and Western Union shall take reasonable steps to have separate provider contracts established under the terms of the First Data Corporation Health and Welfare Benefit Plan to provide coverage to Domestic Business Employees during such period. In consideration for the continued participation of the eligible non-union Domestic Business Employees in the First Data Corporation Health and Welfare Benefit Plan through December 31, 2006, Western Union shall pay to First Data, or reimburse it for, such amounts as are set forth in the Health and Life Benefits Schedule to the Transition Services Agreement.

4.03 Western Union’s Welfare Plans. (a) On or before, but effective as of January 1, 2007, Western Union shall have adopted for the benefit of eligible Domestic Business Employees and their respective eligible dependents, health (including medical, vision and dental), life, accidental death and dismemberment, disability and other Welfare Plans as determined by Western Union (the “ Western Union Welfare Plans ”). Domestic Business Employees shall be eligible to participate in the Western Union Welfare Plans as of January 1, 2007 on the terms established by Western Union.

(b) Following the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries to continue to maintain in full force and effect Welfare Plans as were sponsored and maintained at such Subsidiaries immediately prior to the Distribution Date, and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants or former participants in such plans with respect to their participation therein. First Data and Western Union shall have separate provider contracts established for employees of First Data and Western Union Non-U.S. Subsidiaries effective on or prior to the Distribution Date. In addition, effective either prior to or as of the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries in the United Kingdom, Japan, Canada, and Australia to adopt Welfare Plans with appropriate eligibility and benefits terms, to ensure that Non-Domestic Business Employees in such countries are either (1) eligible to participate in the same type of plan and enjoy the same level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), or (2) eligible to participate in a plan intended to provide a comparable level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants in such plans.

4.04 Welfare Plan Liabilities.

(a) Western Union Liabilities. Except as otherwise provided in this Agreement, Western Union shall assume, and be solely responsible for all First Data and Western Union Welfare Plan liabilities incurred by any Business Employee on or after the Distribution Date.


(b) First Data Liabilities. First Data shall continue to be responsible after the Distribution Date for employer liabilities under the First Data Corporation Health and Welfare Benefit Plan and any Non-U.S Welfare Benefit Plan incurred with respect to Business Employees and their eligible dependents only with respect to the following (except as otherwise provided in this Agreement):

(1) Continuation Coverage for Terminated Domestic Business Employees and their Dependents. Any Domestic Business Employee whose employment terminates prior to January 1, 2007 for any reason, including a Domestic Business Employee currently receiving First Data Corporation Health and Welfare Plan benefits pursuant to a termination agreement or an “Agreement and Release” under the applicable First Data severance policy, and any dependent of such Domestic Business Employee, who elected or is eligible to elect, pursuant to rights under COBRA or any comparable state law, to continue participation in the First Data Corporation Health and Welfare Benefit Plan on the applicable date of termination;

(2) Disabled Persons. First Data shall continue to be responsible after the Distribution Date for all claims for long-term disability incurred prior to the Distribution Date by any non-union Domestic Business Employee who is absent from active employment due to a total disability, as defined in the First Data Corporation Health and Welfare Benefit Plan, on or prior to the Distribution Date to the extent that such long-term disability benefits are provided under an insurance contract. First Data shall also be responsible for long-term disability benefits for any Domestic Business Employee who is receiving weekly short-term disability benefits as of the Distribution Date and who becomes eligible for long-term disability benefits thereafter, provided that the total disability relates to the same condition for which weekly short-term disability benefits were paid and, provided further, that such long-term disability benefits are payable under an insurance contract. Western Union shall assume and be solely responsible for all other claims for long-term disability payable on or after the Distribution Date with respect to any Business Employee and shall continue to be responsible for all claims for short-term disability benefits for any Domestic Business Employee, without regard to when the disability occurred.

4.05 Flexible Spending Accounts. For the period beginning at the close of business on the Distribution Date and ending as of 11:59 p.m. on December 31, 2006, all eligible non-union Domestic Business Employees shall continue to be eligible to participate in the First Data Flexible Spending Account Plan (the “ First Data FSA ”). Payflex, the current First Data FSA vendor, shall maintain the flexible spending account balances for all Domestic Business Employees under the First Data FSA as of December 31, 2006. All 2006 Claims made by Domestic Business Employees shall be submitted to Payflex. Any forfeitures attributable to Domestic Business Employees under the First Data FSA which occur after all 2006 Claims have been processed by Payflex shall be used by First Data as permitted under applicable regulations and an equivalent amount reimbursed to Western Union. For purposes of this Section 4.05, the term “ 2006 Claims ” means: (i) any claims by Domestic Business Employees incurred on or prior to December 31, 2006, and (ii) any claims by Domestic Business Employees incurred through


March 15, 2007 and which are designated by the Domestic Business Employees to be offset against their respective December 31, 2006 balances under the First Data FSA. Effective January 1, 2007, Western Union shall adopt and maintain a flexible spending account plan (the “ Western Union FSA ”) with a new FSA vendor. All claims incurred under the Western Union FSA by Domestic Business Employees shall be made to the new Western Union FSA vendor.

4.06 First Data Assets. First Data shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of the First Data Corporation Health and Welfare Benefit Plan.

ARTICLE V

EQUITY COMPENSATION PLANS

5.01 Stock Options.

(a) First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors, so that options issued under the First Data Corporation 1992 Long Term Incentive Plan, the 2002 First Data Corporation Long Term Incentive Plan, the First Data Corporation 1993 Director’s Stock Option Plan, the Concord EFS, Inc. 1993 Incentive Stock Option Plan, the Concord EFS, Inc. 2002 Stock Option Plan, and the Star Systems, Inc. 2000 Equity Incentive Plan (collectively, the “ First Data LTIPs ”) to purchase First Data Common Stock (“ First Data Stock Options ”) held at the close of business on the Distribution Date by current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees and Business Employees whose employment terminated prior to the Distribution Date (or their respective transferees) shall be replaced pursuant to the terms of the First Data LTIPs with an adjusted First Data Stock Option with an adjusted exercise price and a substitute option issued under The Western Union Company 2006 Long Term Incentive Plan or The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (collectively the “ Western Union LTIP s”) to purchase Western Union Common Stock (a “ Western Union Stock Option ”). Such replacement will be implemented in a manner such that immediately following the Distribution (i) the number of shares relating to the adjusted First Data Stock Option will be equal to the number of shares of First Data Common Stock subject to such option immediately prior to the Distribution, (ii) the number of shares subject to the substitute Western Union Stock Option will be equal to the number of shares of Western Union Common Stock that the option holder would have received in the Distribution had the First Data Common Stock subject to the option represented outstanding shares of First Data Common Stock, and (iii) the per share option exercise price of the original First Data Stock Option will be proportionally allocated between such separate stock options based upon the relative per share trading prices of First Data Common Stock and Western Union Common Stock immediately after the Distribution (determined as described below), with the intention that such adjustment and substitution satisfy the requirements of Section 424 of the Code


and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. For purposes of this Agreement, the per share price of First Data Common Stock immediately after the Distribution shall be the per share closing price on the Distribution Date of such stock trading “with due bills” less the per share closing price of Western Union Common Stock trading on a “when issued” basis, and the per share price of Western Union Common Stock immediately after the Distribution shall be the closing price per share of such stock on the Distribution Date trading on a “when issued” basis. Each adjusted First Data Option and substituted Western Union Option adjusted from or substituted for an original First Data Option described in this Section 5.01(a) , when combined, will in the exclusive and sole discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of such original First Data Option, and each will preserve the ratio from the original option of the exercise price to the fair market value of the stock subject to the option. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.

(b) First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors, so that First Data Stock Options held at the close of business on the Distribution Date by a Business Employee, other than a Business Employee whose employment terminated prior to the Distribution Date, and each First Data Stock Option held by a director of First Data who will become a director of Western Union on or before the Distribution Date (or their respective transferees) will, pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, be replaced with a substitute Western Union Stock Option issued under the Western Union LTIPs, with the intention that such substitution satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Each such substitute option will in the absolute discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Stock Option for which it is substituted and the ratio in the original option of the exercise price to the fair market value of the stock by adjusting the number of shares purchasable and the exercise price, based on a comparison of the per share trading price of First Data Common Stock immediately prior to the Distribution (determined as described below), which includes the value of Western Union, and the per share trading price of Western Union Common Stock immediately after the Distribution (determined as described in Section 5.01(a)). For purposes of this Agreement, the per share trading price of First Data Common Stock immediately prior to the Distribution shall be the per share closing price on the Distribution Date of such stock trading “with due bills.” Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.

(c) With respect to substituted Western Union Stock Options held by current and former employees and directors of First Data and its Subsidiaries and Affiliates (and their respective transferees), Western Union shall engage Salomon Smith Barney or such other entity as shall be designated by Western Union (with the consent of First Data, which consent shall not unreasonably be withheld) to act as recordkeeper for such


substituted Western Union Stock Options (including the responsibility to take customary actions with respect to broker-assisted cashless exercise thereof). If the exercise of such substituted Western Union Stock Options is made pursuant to a broker-assisted cashless exercise through the recordkeeper in accordance with the regulations of the Federal Reserve Board, then immediately after such exercise, the recordkeeper shall sell the number of shares necessary for the following payments to be remitted (which may be all the shares): (i) to the issuer of the option, the exercise price, and (ii) to the employer of the option holder, the employee’s share of income and payroll taxes. Thereafter, there shall be remitted to the option holder: (i) the balance of the proceeds from the sale of all shares or (ii) the remaining whole shares and cash for any fractional shares, as applicable.

5.02 Restricted Stock. First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees, and Business Employees whose employment terminated prior to the Distribution Date, (or their respective transferees) and who on the Distribution Date hold shares of First Data Common Stock issued under one or more First Data LTIPs that are subject to restrictions on sale and transfer (“ First Data Restricted Stock ”) receive shares of Western Union Common Stock that are subject to restrictions on sale and transfer (“ Western Union Restricted Stock ”) in connection with the Distribution under the applicable Western Union LTIP based upon the number of shares of First Data Restricted Stock they hold. In the case of any outstanding First Data Restricted Stock awards which vest based on attainment of a specified share price of First Data Common Stock, such price targets shall be adjusted based on the relative per share trading prices of First Data Common Stock and Western Union Common Stock immediately after the Distribution (determined as described in Section 5.01(a)). First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that the shares of First Data Restricted Stock held by Business Employees, other than Business Employees whose employment terminated prior to the Distribution Date, and any First Data director who will become a director of Western Union on or before the Distribution Date, (or their respective transferees) will be replaced with substitute shares of Western Union Restricted Stock issued under the applicable Western Union LTIP. Each such substitute Western Union Restricted Stock award will in the absolute discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Restricted Stock award for which it was substituted by adjusting the number of restricted shares based on a comparison of the per share trading price of First Data Common Stock immediately prior to the Distribution (determined as described in Section 5.01(b)), which includes the value of Western Union, and the per share trading price of Western Union Common Stock immediately after the Distribution (determined as described in Section 5.01(a)). In the case of any outstanding First Data Restricted Stock awards which vest based on attainment of a specified share price of First Data Common Stock, such price


targets of the replaced Western Union Restricted Stock shall also be adjusted based on a comparison of the per share trading price of First Data Common Stock immediately prior to the Distribution (determined as described in Section 5.01(b)), which includes the value of Western Union, and the per share trading price of Western Union Common Stock immediately after the Distribution (determined as described in Section 5.01(a)). All employment with both First Data and Western Union shall be taken into account for purposes of determining when the restrictions on the sale and transfer of such shares lapse. Such substitution and replacement shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.

5.03 Restricted Stock Units. First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees and Business Employees whose employment terminated prior to the Distribution Date (or their respective transferees) will have each of their First Data Restricted Stock Units (as defined in the First Data LTIPs) replaced with an adjusted First Data Restricted Stock Unit and a substitute Western Union restricted stock unit issued under the Western Union LTIPs (“ Western Union Restricted Stock Unit ”). The number of Western Union Restricted Stock Units issued in replacement for such First Data Restricted Stock Units shall be calculated so that immediately following the Distribution (i) the number of First Data Restricted Stock Units will be equal to the number of First Data Restricted Stock Units held by the participant immediately prior to the Distribution, and (ii) the number of Western Union Restricted Stock Units will be equal to the number of shares of Western Union Common Stock that the holder of the restricted stock unit would have received in the Distribution had the First Data Restricted Stock Unit represented outstanding shares of First Data Common Stock. First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that each First Data Restricted Stock Unit held by a Business Employee (or their respective transferees), other than a Business Employee whose employment terminated prior to the Distribution Date, will be replaced with a substitute Western Union Restricted Stock Unit issued under the applicable Western Union LTIP. It is intended that each substitute restricted stock unit will in the sole and absolute judgment of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Restricted Stock Unit for which it was substituted by representing a number of Western Union Restricted Stock Units based on a comparison of the per share trading price of First Data Common Stock immediately prior to the Distribution (determined as described in Section 5.01(b)), which includes the value of Western Union, and the per share trading price of Western Union Common Stock immediately after the Distribution (determined as described in Section 5.01(a)). Such


substitute Western Union Restricted Stock Units will take into account all employment with both First Data and Western Union, and their respective Subsidiaries and Affiliates, for purposes of determining when the restricted stock unit vests. Such substitution and replacement shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.

5.04 Approval and Terms of Equity Awards. By its approval of this Article V , the Board of Directors of Western Union, as issuer of substitute and replacement awards provided hereunder, and the Compensation Committee of the Board of Directors of First Data, as sole shareholder of Western Union, hereby adopt and approve, respectively, the issuance of the substitute and replacement options and awards provided for herein. Except as set forth above, the terms of the First Data LTIPs and of the outstanding equity compensation awards held by participants under the First Data LTIPs and this Agreement and the substitute Western Union equity awards shall be subject to the terms of such plans and applicable award agreements (including but not limited to, the First Data LTIP provisions which require full vesting upon a change of control of First Data), except that references in such outstanding substitute and replacement Western Union awards to “Board” and “Compensation Committee” shall mean the Board and Compensation Committee of Western Union and references to the “Company” as issuer of securities thereunder and as the holder and transferee of unvested shares of Western Union Restricted Stock shall mean Western Union. Notwithstanding the foregoing, substitute awards made under the Western Union LTIPs pursuant to Western Union’s obligations under this Agreement shall take into account all employment with both First Data and Western Union, and their respective Subsidiaries and Affiliates, for purposes of determining when such awards vest and terminate. Such substitution shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code.

5.05 Responsibility for Tax Withholding, Reporting, and Social Insurance Contributions. First Data and Western Union agree that, unless prohibited by applicable law, (a) First Data shall be responsible for all tax withholding and reporting obligations and shall pay the employer’s share of any social insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the substitute and replacement awards held by current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees (or their respective transferees), (b) Western Union shall be responsible for all tax withholding and reporting obligations and shall pay the employer’s share of any social insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the substitute and replacement awards held by Business Employees (or their transferees). First Data and Western Union agree to enter into any necessary agreements regarding the subject matter of this Section 5.05 to enable First Data and Western Union to fulfill their respective obligations hereunder, including but not limited to compliance with all applicable laws and regulations regarding the reporting, withholding or remitting of income and social insurance taxes.


5.06 No Change of Control. The Distribution will not constitute a “change of control” for purposes of First Data equity awards which are outstanding as of the Distribution Date.

5.07 Establishment of Western Union Equity Plans. Effective as of the Distribution Date, Western Union shall establish the Western Union LTIPs to provide for awards which may include the following: (i) stock options (both qualified and nonqualified), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock unit awards, (v) phantom stock units, (vi) performance grants and (vii) bonus awards, including, without limitation, the awards provided for herein. In exercising its power and authority hereunder with respect to replacement and substitute stock-based awards held by current and former employees (other than Transferred Employees) and directors of First Data, its Subsidiaries and Affiliates (and their respective transferees), Western Union shall (i) act in good faith and (ii) cooperate with and give due regard to any information provided by First Data. In addition, with respect to such replacement and substitute stock-based awards, Western Union shall not, without the prior written consent of the First Data Compensation Committee, take any discretionary action to accelerate vesting of any such awards.

ARTICLE VI

COMPENSATION MATTERS

AND GENERAL BENEFIT MATTERS

6.01 Cessation of Participation in First Data Plans and Non-ERISA U.S. Benefit Arrangements. Except as otherwise provided in this Agreement or as required by the terms of any First Data Plan or First Data Non-ERISA Benefit Arrangement, or by applicable law, First Data and Western Union shall take any and all action as shall be necessary or appropriate so that participation in First Data Plans and First Data Non-ERISA Benefit Arrangements by all Business Employees shall terminate as of the close of business on the Distribution Date and Western Union shall cease to be a participating employer under the terms of such First Data Plans and First Data Non-ERISA Benefit Arrangements as of such time.

6.02 Assumption of Certain Employee Related Obligations. Except as otherwise provided in this Agreement, effective as of the close of business on the Distribution Date, Western Union shall assume, and none of First Data or any of its Subsidiaries or Affiliates shall have any further liability for, the following agreements, obligations and liabilities and Western Union shall indemnify First Data and its Subsidiaries and Affiliates, and the officers, directors, and employees of each, and hold them harmless with respect to such agreements, obligations or liabilities:

(a) Agreements entered into between First Data, its Subsidiaries or Affiliates and Business Employees.

(b) Agreements entered into between First Data, its Subsidiaries or Affiliates and independent contractors providing services solely to the Transferred Business.


(c) All collective bargaining agreements, collective agreements, trade union, or works council agreements entered into between First Data, its Subsidiaries or Affiliates and any union, works council, or other body representing only Business Employees.

(d) All wages, salary, incentive compensation, commissions and bonuses payable to Business Employees on or after the Distribution Date, without regard to when such wages, salary, incentive compensation, commissions and bonuses are or may have been earned.

(e) All moving expenses and obligations related to relocation, repatriation, transfers, or similar items incurred by or owed to Business Employees.

(f) All immigration-related, visa, work application, or similar rights, obligations and liabilities related to Business Employees.

(g) All liabilities and obligations whatsoever of the Transferred Business with respect to claims made by or with respect to Business Employees or any other persons who at any time prior to the Distribution Date had employment duties primarily related to the Transferred Business relating to any employee benefit plan, program or policy not otherwise retained or assumed by First Data pursuant to this Agreement, including such liabilities relating to actions or omissions of or by Western Union or any officer, director, employee or agent thereof prior to the Distribution Date.

6.03 Restrictive Covenants in Employment and Other Agreements. To the extent permitted under applicable law, following the Distribution, Western Union and its Subsidiaries and Affiliates shall be considered to be successors to First Data and its Subsidiaries and Affiliates for purposes of all agreements containing restrictive covenants (including but not limited to confidentiality and non-competition provisions) between First Data (or a First Data Subsidiary or Affiliate) and Business Employees, employees of First Data (or a First Data Subsidiary or Affiliate) as of the Distribution Date that Western Union reasonably determines have substantial knowledge of the Transferred Business, former employees and independent contractors executed prior to the Distribution Date such that each of First Data, Western Union and their respective Subsidiaries and Affiliates shall all enjoy the rights and benefits under such agreements, with respect to such party’s and their respective Subsidiaries” and Affiliates’ business operations; provided , however , that (a) in no event shall First Data be permitted to enforce the restrictive covenant agreements against Business Employees in their capacity as employees of Western Union or its Subsidiaries, and (b) in no event shall Western Union be permitted to enforce the restrictive covenants agreements of First Data employees in their capacity as employees of First Data or its Subsidiaries.

6.04 Severance. Effective as of the Distribution Date, Western Union may establish one or more severance plans and policies with respect to Business Employees as Western Union deems appropriate in its discretion. First Data shall have no liability or obligation under any First Data severance plan or policy with respect to Business Employees whose employment terminates on or after the Distribution Date. Following the Distribution Date, First Data shall continue to be responsible for administering all


payments and benefits under the applicable First Data severance policies or any termination agreements with Business Employees, with respect to Business Employees whose employment has terminated prior to the Distribution Date for an eligible reason under such policies or in accordance with such agreements; provided that Western Union shall reimburse, and shall indemnify First Data, and its Subsidiaries and Affiliates, for any amounts payable to Business Employees under such policies and that Western Union shall be charged for the continuation of Welfare Plan benefits to such terminated Business Employees and their dependents on and after the Distribution Date on terms consistent with the methodology specified in the Health and Life Benefits Schedule to the Transition Services Agreement. First Data agrees to indemnify Western Union against any loss or liability resulting from First Data’s gross negligence, willful misconduct or bad faith in the administration of its severance policies or any termination agreement with a Business Employee. It is not intended that any Business Employee will be eligible for termination or severance payments or benefits from First Data or its Subsidiaries or Affiliates as a result of the transfer or change of employment from First Data to Western Union or their respective Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in the event that any such termination or severance payments or benefits become payable on account of such transfer, change or the refusal of a Business Employee to accept employment with Western Union, Western Union shall indemnify First Data, and its Subsidiaries and Affiliates, for the amount of such termination or severance payments or benefits.

6.05 Past Service Credit. With respect to all Domestic Business Employees, Western Union shall recognize all service recognized under the comparable First Data Plans and First Data Non-ERISA Benefit Arrangements for purposes of determining eligibility, participation, vesting, and calculation of benefits under Western Union’s comparable plans and programs, provided that there shall be no duplication of benefits for Business Employees under Western Union’s plans and programs. First Data will provide to Western Union copies of any records available to First Data to document such service, plan participation and membership and cooperate with Western Union to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to such Domestic Business Employees. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such information, First Data and Western Union shall each comply with all applicable laws, regulations and internal policies and each party shall indemnify and hold harmless the other party from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party) to so comply with all applicable laws, regulations and internal policies applicable to such information.

6.06 Accrued Vacation Days Off. Western Union shall recognize and assume all liability for all vacation, holiday, sick leave, flex days and personal days off, including banked vacation, accrued by Business Employees as of the Distribution Date and Western Union shall credit each Business Employee with such days off accrual.

6.07 Leaves of Absence. Western Union will continue to apply the leave of absence policies maintained by First Data to inactive Business Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by Business Employees prior to the Distribution Date shall be deemed to have been taken as employees of Western Union.


6.08 First Data Assets. Except as otherwise set forth herein, First Data shall retain all reserves, bank accounts, trust funds or other balances maintained with respect to First Data’s Non-ERISA Benefit Arrangements.

6.09 Further Cooperation/Personnel Records/Data Sharing. The parties shall provide each other such records and information only as necessary or appropriate to carry out their obligations under law, this Agreement, or for the purposes of administering the Western Union plans and policies. The parties shall take commercially reasonable actions so that after the Distribution, all ministerial matters relating to Western Union equity awards issued to individuals who immediately after the Distribution remain employees and directors of First Data or its Subsidiaries or Affiliates can be administered by First Data. First Data shall provide information requested by Western Union relating to First Data employee status changes (such as terminations, retirements, etc.) and exercised options during the ten-year period beginning on the Distribution Date. Subject to applicable law, all information and records regarding employment and personnel matters of Business Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by Western Union in accordance with all laws and policies relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. Access to such records after the Distribution Date will be provided to First Data in accordance with Article XIV of the Distribution Agreement. Notwithstanding the foregoing, First Data shall retain reasonable access to those records necessary for First Data’s continued administration of any plans or programs on behalf of Business Employees after the Distribution Date, provided that such access shall be limited to individuals who have a job-related need to access such records. First Data shall also retain copies of all confidentiality and non-compete agreements with any Business Employee in which First Data has a valid business interest. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such information, First Data and Western Union shall each comply with all applicable laws, regulations and internal policies, and each party shall indemnify and hold harmless the other party from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party) to so comply with all applicable laws, regulations and internal policies applicable to such information.

ARTICLE VII

GENERAL PROVISIONS

7.01 Preservation of Rights to Amend. The rights of First Data or Western Union to amend or terminate any plan, program, or policy referred to herein shall not be limited in any way by this Agreement.

7.02 Confidentiality. Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of the confidentiality provisions set forth in Section 14.8 of the Distribution Agreement.

7.03 Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, as of and after the Distribution Date, Western Union shall assume, and be


solely liable for, the handling, administration, investigation, and defense of actions, including, without limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims, asserted at any time against First Data or Western Union by any Business Employee (including any dependent or beneficiary of a Business Employee), or any other person to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with the Transferred Business. Any Losses arising from such actions shall be deemed Assumed Liabilities under the Distribution Agreement.

7.04 Reimbursement and Indemnification. The parties hereto agree to reimburse each other, within 30 days of receipt from the other party of appropriate verification, for all costs and expenses which each may incur on behalf of the other as a result of any of the Welfare Plans, Pension Plans and Non-ERISA Benefit Arrangements and, as contemplated by Section 6.04, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by Western Union pursuant to this Agreement, and all liabilities retained, assumed or indemnified against by First Data pursuant to this Agreement, shall in each case shall be subject to the indemnification provisions of Article XII of the Distribution Agreement.

7.05 Entire Agreement. This Agreement, including the Schedules hereto and the sections of the Distribution Agreement referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.

7.06 Choice of Law. This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware.

7.07 Amendment. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.

7.08 Waiver. 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 given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or 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.

7.09 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such a 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 or provisions shall be


ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

7.10 Execution in Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed 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 and delivered to each of the Parties.

7.11 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided, however, that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).

7.12 Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when delivered or mailed in accordance with the terms of Section 15.9 of the Distribution Agreement.

7.13 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Affiliate of such Party.

7.14 No Public Announcement. Neither First Data nor Western Union 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 either Party shall be so obligated by law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use 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 applicable law, accounting and SEC disclosure obligations or the rules of any stock exchange.

7.15 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of such Party under this Agreement and, to the fullest extent legally permissible, each of Western Union and First Data, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law.

7.16 Mutual Drafting. This Agreement shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.


7.17 Dispute Resolution. The Parties agree that any dispute, controversy or claim between them with respect to the matters covered hereby shall be governed by and resolved in accordance with the procedures set forth in Article XIII of the Distribution Agreement.

7.18 No Third Party Beneficiaries. No Business Employee or other current or former employee of First Data or Western Union or any Subsidiary or Affiliate of either (or his/her spouse, dependent or beneficiary), or any other person not a party to this Agreement, shall be entitled to assert any claim hereunder. The provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.

7.19 Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.

7.20 Corporate Authorization. The officers of First Data and Western Union are hereby authorized, empowered and directed, in the name and on behalf of each of First Data and Western Union, respectively, to take or cause to be taken all such further action, to execute and deliver or cause to be executed and delivered all such further agreements, certificates, instruments and documents, to make or cause to be made all such filings with governmental or regulatory authorities, and to pay or cause to be paid all such fees and expenses, in each case which shall in such officers’ judgment be deemed necessary, proper or advisable to effect and carry out the intent of this Agreement, such determination to be evidenced conclusively by such officers’ execution and delivery thereof or taking of action in respect thereto.


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.

 

FIRST DATA CORPORATION

By:

 

/s/ Kimberly S. Patmore

 

Name:

 

Kimberly S. Patmore

 

Title:

  Executive Vice President and
    Chief Financial Officer
THE WESTERN UNION COMPANY

By:

 

/s/ David G. Barnes

 

Name:

  David G. Barnes
 

Title:

 

Executive Vice President

    Finance and Strategic Development

Exhibit 10.3

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT is made as of September 29, 2006 by and between First Data Corporation, a Delaware corporation ( First Data ), and The Western Union Company, a Delaware corporation ( Western Union ).

WHEREAS, First Data, through certain of its Subsidiaries, is, among other things, engaged in the business of providing money transfer, consumer to biller payment services, retail money orders and certain prepaid services (the Western Union Business );

WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to transfer to Western Union those Subsidiaries of First Data that are engaged in the Western Union Business and certain other assets related thereto;

WHEREAS, First Data has agreed to transfer, or cause to be transferred, to Western Union such Subsidiaries;

WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to distribute on a pro rata basis to the holders of First Data’s common stock, $0.01 par value, without any consideration being paid by the holders of such common stock, all of the outstanding shares of Western Union common stock, $0.01 par value, then owned by First Data;

WHEREAS, First Data and Western Union have entered into a Separation and Distribution dated as of the date hereof (the Distribution Agreement ) in order to carry out, effect and consummate the foregoing transactions; and

WHEREAS, to facilitate the transactions described above, First Data and Western Union deem it to be appropriate and in the best interests of First Data and Western Union that First Data provide certain Services to Western Union and Western Union provide certain Services to First Data, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Distribution Agreement. As used in this Agreement:

(a) Action means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any Governmental Authority.


(b) Additional Services means the Additional First Data Services or the Additional Western Union Services, individually, or the Additional First Data Services and the Additional Western Union Services, collectively, as the context may indicate. Any Additional Services provided pursuant to this Agreement shall be deemed to be “ Services ” under this Agreement.

(c) Affiliate means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person. After the Distribution, Western Union and First Data shall not be deemed to be under common Control for purposes hereof due solely to the fact that Western Union and First Data have common stockholders.

(d) Agreement means this Transition Services Agreement together with those portions of the Distribution Agreement referenced herein and all Annexes attached hereto and incorporated herein by this reference and all amendments, modifications and changes hereto and thereto.

(e) Authorized Representative means any of the individuals listed on Annex A .

(f) Consent means a Governmental Consent or a Third Party Consent.

(g) Control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.

(h) Distributed Companies means FDCS Holdings, CESI Holdings, TeleCheck EBP RE, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, First Data Canada Limited and their respective Subsidiaries (including those formed or acquired after the date hereof).

(i) Expenses means any and all 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, consultants, accountants and other professionals).

(j) Fees for a particular Service shall be as set forth on Annex B or Annex C , as the case may be.

(k) First Data Indemnified Parties means the First Data Parties (for so long as such Person is a First Data Party) and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing.

(l) First Data Parties means First Data and its Subsidiaries (including those formed or acquired after the date hereof), other than the Western Union Parties.

(m) First Data Services means the Services generally described on Annex B and any other Service provided by First Data or its Affiliates pursuant to this Agreement.

 

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(n) First Data Systems means any computer software program or routine or part thereof owned, licensed or provided by or for any First Data Party which is used by any Western Union Party or its suppliers on any First Data Party’s behalf pursuant to this Agreement, and any other computer software program or routine so designated in Annex B or Annex C, each as modified, maintained or enhanced from time to time by any First Data Party, any Western Union Party or any Third Party.

(o) Governmental Authority” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.

(p) Governmental Consents means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.

(q) Losses means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges.

(r) Party means a First Data Party or a Western Union Party, as applicable.

(s) Person means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Authority.

(t) Services means the First Data Services or the Western Union Services, individually, or the First Data Services and the Western Union Services, collectively, as the context may indicate. “ Services ” shall also include those First Data and Western Union functions described in Sections 7.2(a) through 7.2(f) .

(u) Subsidiary means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or Controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that Person. After the Distribution, First Data and Western Union shall not be deemed to be under common Control for purposes hereof due solely to the fact that First Data and Western Union have common stockholders.

(v) Systems means the First Data Systems or the Western Union Systems, individually, or the First Data Systems and the Western Union Systems, collectively, as the context may indicate.

(w) Third Party means a Person that is not an Affiliate of any Party hereto.

 

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(x) Third Party Consents means any material consent, approval or authorization to be obtained from any Third Party that is not a Governmental Authority.

(y) Western Union Indemnified Parties means the Western Union Parties (for so long as such Person is a Western Union Party) and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing.

(z) Western Union Parties means Western Union, the Western Union Subsidiaries and any other Subsidiary of Western Union (including those formed or acquired after the date hereof), in each case, other than the Distributed Companies.

(aa) Western Union Services means the Services generally described on Annex C and any other Service provided by Western Union or its Affiliates pursuant to this Agreement.

(bb) Western Union Subsidiaries means, collectively, ECG, FFMC, GMT, Paymap, WUSI and each Subsidiary of any of the foregoing other than the Distributed Companies.

(cc) Western Union Systems means any computer software program or routine or part thereof owned, licensed or provided by or for any Western Union Party which is used by any First Data Party or its suppliers on any Western Union Party’s behalf pursuant to this Agreement, and any other computer software program or routine so designated on Annex B or Annex C, each as modified, maintained or enhanced from time to time by any Western Union Party, any First Data Party or any Third Party.

Section 1.2 Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:

(i) words used in the singular include the plural and words used in the plural include the singular;

(ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;

(iii) references to any gender includes the other gender;

(iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(v) references to any Article, Section or Annex means such Article or Section of, or such Annex to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;

 

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(vii) references to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(viii) references to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(x) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;

(xi) if there is any conflict between the provisions of the Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof; if there is any conflict between the provisions of the body of this Agreement and the Annexes hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Annex;

(xii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(xiii) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Affiliates to take such action or refrain from taking such action, as the case may be (and, accordingly, if Services are provided by Affiliates of First Data, references to “First Data” shall be deemed to be references to such Affiliate which shall provide the Services under this Agreement; if Services are provided by Affiliates of Western Union, references to “Western Union” shall be deemed to be references to such Affiliate which shall provide the Services under this Agreement); and

(xiv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.

 

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ARTICLE II

TERM

Section 2.1 Term . The term of this Agreement shall commence on the Distribution Date and end on the first anniversary of the Distribution Date (the Term ).

ARTICLE III

PERFORMANCE OF SERVICES

Section 3.1 General . (a) During the Term, and subject to the terms and conditions of this Agreement, First Data will provide, or will cause to be provided, the First Data Services to Western Union and its Affiliates. Unless specifically provided to the contrary on Annex B (including any performance standards set forth therein) or Annex D , all First Data Services provided pursuant to this Agreement shall be performed or provided, as applicable: (i) with the use of reasonable care; (ii) consistent with this Agreement and in substantially the same manner (including as to level, quality and timeliness) as such Services have been provided to the Western Union Business by the First Data Parties on or prior to the Distribution Date; (iii) in material compliance with applicable laws, rules and regulations; (iv) in a manner substantially consistent with the First Data Parties’ usual and customary practices with respect to the Western Union Business on or prior to the Distribution Date; and (v) with substantially the same priority under comparable circumstances as it provides such services to itself and its Subsidiaries.

(b) During the Term, and subject to the terms and conditions of this Agreement, Western Union will provide, or will cause to be provided, the Western Union Services to First Data and its Affiliates. Unless specifically provided to the contrary on Annex C (including any performance standards set forth therein) or Annex D , all Western Union Services provided pursuant to this Agreement shall be performed or provided, as applicable: (i) with the use of reasonable care; (ii) consistent with this Agreement and in substantially the same manner (including as to level, quality and timeliness) as such Services have been provided to the First Data Business by the Western Union Parties on or prior to the Distribution Date; (iii) in material compliance with applicable laws, rules and regulations; (iv) in a manner substantially consistent with the Western Union Parties’ usual and customary practices with respect to the First Data Business on or prior to the Distribution Date; and (v) with substantially the same priority under comparable circumstances as it provides such services to itself and its Subsidiaries.

Section 3.2 Additional Services . (a) If Western Union reasonably determines that additional transition services of the type previously provided by the First Data Parties to the Western Union Business are necessary to conduct the Western Union Business and Western Union or its Affiliates are not able to provide such services to the Western Union Business (each such service an Additional First Data Service ), then Western Union may provide written notice thereof to First Data. Upon receipt of such notice by First Data, if First Data is willing, in its sole discretion, to provide such Additional First Data Service during the Term, the Parties will negotiate in good faith an amendment to Annex B setting forth the Additional First Data Service, the terms and conditions for the provision of such Additional First Data Service and the Fees payable by Western Union for such Additional First Data Service, such Fees to be determined on an arm’s-length basis.

 

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(b) If First Data reasonably determines that additional transition Services of the type previously provided by the Western Union Parties to the First Data Business are necessary to conduct the First Data Business and First Data or its Affiliates are not able to provide such services to the First Data Business (each such service an Additional Western Union Service ), then First Data may provide written notice thereof to Western Union. Upon receipt of such notice by Western Union, if Western Union is willing, in its sole discretion, to provide such Additional Western Union Service during the Term, the Parties will negotiate in good faith an amendment to Annex C setting forth the Additional Western Union Service, the terms and conditions for the provision of such Additional Western Union Service and the Fees payable by First Data for such Additional Western Union Service, such Fees to be determined on an arm’s-length basis.

Section 3.3 Procedure . (a) Any requests by a Party to the other Party regarding (i) the Services or (ii) any modification or alteration to the provision of the Services must be made by an Authorized Representative (it being understood that the receiving Party shall not be obligated to agree to any modification or alteration requested thereby). A Party receiving Services shall provide no less than 30 days written notice (unless a shorter time is mutually agreed upon by the Parties) to the other Party of any Services that, prior to the expiration of the Term, are no longer needed from the other Party, in which case this Agreement shall terminate as to such Services, provided that the Party providing such Services must consent to such early termination, such consent not to be unreasonably withheld, conditioned or delayed (a Partial Termination ). The parties shall mutually agree as to the effective date of any Partial Termination. In the event of any termination prior to the expiration of the Term or of any Partial Termination hereunder, (x) with respect to any terminated Services in which the Fee for such terminated Services is charged as a flat monthly rate, the Fee for the month in which the termination occurs shall be 0% of the monthly rate for such terminated Service, in the event that the effective date of termination occurs on or prior to the 10 th calendar day of such month, or 100% of the monthly rate for such Service, in the event that the effective date of termination occurs on or after the 11 th calendar day of such month, and (y) with respect to any other terminated Services, all amounts due pursuant to the terms hereof with respect to the terminated Services shall be appropriately pro rated and reduced to reflect such shortened period during which such Services are actually provided hereunder, and each Party shall refund to the other Party an appropriate pro rated amount for any such Services that have been paid for in advance. Notwithstanding the preceding sentence, to the extent any amounts due or advances made hereunder related to costs or expenses that have been or will be incurred and that cannot be recovered by a Party providing Services, such amounts due or advances made shall not be pro rated or reduced and such Party shall not be required to refund to the other Party any pro rated amount for such costs or expenses; and the terminating Party shall reimburse the Party providing such Service for any Third Party cancellation or similar charges incurred as a result of such early termination. Notwithstanding anything to the contrary hereunder, each Party may avail itself of the remedies set forth in Sections 3.4(b) and 10.2 without fulfilling the notice requirements of this Section 3.3(a) .

(b) In the event of a Partial Termination, this Agreement shall remain in full force and effect with respect to the Services which have not been terminated by the Parties as provided herein.

 

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(c) Each Party acknowledges and agrees that certain of the Services to be provided under this Agreement have been, and will continue to be provided (in accordance with this Agreement) to the First Data Business or the Western Union Business, as applicable, by Third Parties designated by the Party responsible for providing such Services. To the extent so provided, the Party responsible for providing such Services shall use commercially reasonable efforts to (a) cause such Third Parties to provide such Services under this Agreement and/or (b) enable the Party seeking the benefit of such Services and its Affiliates to avail itself of such Services; provided , however , that if any such Third Party is unable or unwilling to provide any such Services, the Parties agree to use their commercially reasonable efforts to determine the manner in which such Services can best be provided (it being acknowledged and agreed that any costs or expenses to be incurred in connection with obtaining a Third Party to provide any such Services shall be paid by the Party to which such Services are provided; provided that the Party responsible for providing such Services shall use commercially reasonable efforts to communicate the costs or expenses expected to be incurred in advance of incurring such costs or expenses).

Section 3.4 Disclaimer of Warranties; Force Majure .

(a) Except as expressly set forth in this Agreement: (i) each Party acknowledges and agrees that the other Party makes no warranties with respect to the Services to be provided hereunder; and (ii) each Party hereby expressly disclaims all warranties, expressed or implied, of any kind with respect to the Services to be provided hereunder, including, without limitation, any warranty of merchantability or fitness for a particular purpose as to the Services provided hereunder. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS AGREEMENT ARE PROVIDED AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT WARRANTY OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER.

(b) If either Party, any of its Affiliates or any Third Party service provider is prevented from or delayed in complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or components, any law, order, proclamation, regulation, ordinance, demand, seizure or requirement of any Governmental Authority, riot, civil commotion, war, rebellion, acts of terrorism, nuclear accident or other acts of God, or acts, omissions or delays in acting by any governmental or military authority or the other Party or other causes beyond the reasonable control and without the fault or negligence of such Party, then upon notice to the other Party, the affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and, unless otherwise set forth herein to the contrary, the affected Party shall have no liability to the other Party, its Affiliates or any other Person in connection therewith. Each Party shall use commercially reasonable efforts to promptly remove such disability as soon as possible, but in any event no later than 30 days after giving notice of such disability; provided , however , that nothing in this Section 3.4(b) will be construed to require the settlement of any strike, walkout, lockout or other labor dispute on terms which, in the

 

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reasonable judgment of the affected Party, are contrary to its interest. It is understood that the settlement of a strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected Party. If a Party is unable to provide any of the Services due to such a disability, each Party shall use commercially reasonable efforts to cooperatively seek a solution that is mutually satisfactory. In addition, upon becoming aware of a disability causing a delay in performance or preventing performance of any obligations of a Party under this Agreement, the otherwise defaulting Party shall promptly notify the other Party in writing of the existence of such disability and the anticipated duration of the disability. The Party entitled to the benefit of the Services shall have the right, but not the obligation, to engage subcontractors to perform such obligations for the duration of the period during which such disability delays or prevents the performance of such obligation by the affected Party, it being agreed that the Fees paid or payable under this Agreement with respect to the Service affected by the disability shall be reduced (or refunded, if applicable) on a dollar for dollar basis for all amounts paid by the affected Party to such subcontractors, provided that the affected Party shall not be responsible for the amount of excess fees charged by the subcontractor to perform such Services to the extent they exceed the Fees for the applicable period of disability. Notwithstanding anything to the contrary hereunder, each Party shall make the mitigation and resolution of any disability affecting its ability to perform hereunder a high priority and shall use efforts of a type, intensity and duration which, taking into account the type of Services and the significance of such Services to the other Party’s business, represent a good and professional response to such disability, but in any event no less than commercially reasonable efforts. In addition, and notwithstanding anything hereunder to the contrary, the Parties agree that this Section 3.4(d) shall not be construed so as to excuse a Party of its obligations to perform in accordance with Article VII and Article VIII at all times during the Term.

Section 3.5 Transition of Responsibilities . Each Party agrees to use commercially reasonable efforts to reduce or eliminate its and its Affiliates’ dependency on each Service as soon as is reasonably practicable. Each Party agrees to cooperate with the other Party to facilitate the smooth transition of the Services being provided to such Party by the other Party.

ARTICLE IV

COOPERATION

Section 4.1 Cooperation . Each Party shall, and shall cause its Affiliates to, use good faith efforts to cooperate with the other Party in all matters relating to the provision and receipt of the Services, including providing information and documentation sufficient for the other Party to provide the Services and making available, as reasonably requested by the other Party, timely decisions, approvals and acceptances in order that the other Party and its Affiliates may perform their respective obligations under this Agreement in a timely manner.

Section 4.2 Consents . (a) Each Party shall, and shall cause its Affiliates to, cooperate to obtain all Consents for any Third Party software or other Third Party intellectual property related to the provision of the Services sufficient to enable the Parties to perform the Services in accordance with this Agreement; provided , however , that neither Party shall be obligated under this Agreement to pay any consideration, grant any concession or incur any Liability to any third Person to obtain any such Consent. Lists that identify all Third Party software or other Third Party intellectual property the Parties reasonably believe will be used to provide the Services

 

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(other than Additional Services), whether any Consent is believed to be required and whether such Consent has been obtained as of the date hereof are set forth on Annex D .

(b) In the event that any Consent is not obtained, then, unless and until such Consent is obtained, the Parties shall cooperate with each other in achieving a reasonable alternative arrangement for the Party entitled to the benefit of the Services to continue to process its work and for the Party providing the Services to perform such Services.

Section 4.3 Informal Dispute Resolution . The Authorized Representatives of First Data and Western Union (each of whom shall have the authority to legally bind the Party it represents) shall meet as often as shall reasonably be requested by either Party to review the performance of the other Party under this Agreement. Written minutes of such meetings may be kept. In the event of any dispute or disagreement between the Parties either with respect to the interpretation of any provision of this Agreement, or with respect to the performance by First Data or Western Union hereunder, then upon the written request of First Data or Western Union each Party shall appoint within 14 calendar days a designated officer whose task it shall be to meet for the purpose of endeavoring to resolve such dispute or to negotiate for an adjustment to such provision of the Agreement. The Parties shall use commercially reasonable efforts to cause their respective designated officers to meet within 15 days following identification of the designated officers. The designated officers shall meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all information with respect to the matter in issue which the Parties believe to be appropriate and germane in connection with its resolution. Such officers shall discuss the problem and/or negotiate in good faith in an effort to resolve the dispute or renegotiate the applicable provision without the necessity of any formal proceeding relating thereto. During the course of such negotiation, subject to the Parties’ respective confidentiality obligations, all reasonable requests made by either Party to the other for information shall be honored in order that each of the Parties may be fully advised in the matter. The specific format for such discussions shall be left to the discretion of the designated officers but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party. Except for claims arising under Articles VII or VIII , the Parties agree to follow the dispute resolution process set forth in this Section 4.3 prior to the commencement of any Action under Section 12.14 .

ARTICLE V

FEES

Section 5.1 Fees . Each Party shall pay the other Party the Fees for the Services provided by such other Party under this Agreement. The Fees for the First Data Services are set forth on Annex B and the Fees for the Western Union Services are set forth on Annex C .

Section 5.2 Taxes . To the extent required or permitted by applicable law, there shall be added to any Fees due under this Agreement, and each Party agrees to pay to the other, amounts equal to any taxes, however designated or levied, based upon such Fees, or upon this Agreement or the Systems, Services or materials provided under the Agreement, or their use, including state and local privilege or excise taxes based on gross revenue and any taxes or amounts in lieu thereof paid or payable by the Party providing Services hereunder. In the event taxes are not added to an invoice from the Party providing Services hereunder, the Party purchasing such

 

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Services is responsible to remit to the appropriate tax jurisdiction any additional amounts due including tax, interest and penalty. If additional amounts are determined to be due on the Services provided hereunder as a result of an audit by a tax jurisdiction, the Party purchasing the Services hereunder agrees to reimburse the Party providing the Services for the additional amounts due including tax, interest and penalty. The Party providing Services hereunder will be responsible for penalty or interest associated with its failure to remit invoiced taxes. The Parties further agree that no Party to this Agreement shall be required to pay any franchise taxes, taxes based on the net income of the other Party or personal property taxes on property owned or leased by a Party and used by such Party to provide Services.

ARTICLE VI

INVOICE AND PAYMENT; AUDIT

Section 6.1 Invoices and Payment . Within 20 days following the end of each month during the Term (or within 20 days after receipt of a Third Party supplier’s invoice in the case of Services that are provided by a Third Party supplier), each Party will submit to the other Party for payment a written statement of amounts due under this Agreement for such month. For Services set forth on Annex B or Annex C , the statement will set forth the Fees, in the aggregate and itemized, set forth on Annex B or Annex C as the case may be. Each statement will specify the nature of any amounts due for any Fees as set forth on Annex B or Annex C and will contain reasonably satisfactory documentation in support of such amounts as specified therein and such other supporting detail as the other Party may reasonably require to validate such amounts due.

Section 6.2 Timing of Payment; No Offsets . Each Party will pay all undisputed amounts due pursuant to this Agreement within 30 days after the date upon which each such statement that is required to be provided hereunder is received by such Party. Neither Party shall offset any amounts owing to it by the other Party or any of its Affiliates against amounts payable by such Party hereunder or any other agreement or arrangement.

Section 6.3 Non-Payment . If either Party fails to pay the full amount of any invoice within 45 days after its receipt of the invoice, such failure shall be considered a material breach of this Agreement (except to the extent any invoiced amounts are reasonably disputed by the non-paying Party in good faith and of which dispute the non-paying Party has notified the other Party in accordance with the requirements of this Agreement). The remedies provided to each Party by this Section 6.3 and by Section 10.2 shall be without limitation of any other applicable provisions of this Agreement.

Section 6.4 Late Payments . Payments made after the date they are due shall bear interest at a rate per annum equal to the Prime Rate plus 2.0%.

Section 6.5 Audit Rights . (a) Each Party may audit (or cause an independent Third Party auditor to audit) the books, records and facilities of the other Party to the extent necessary to determine the other Party’s compliance with this Agreement with respect to Fees paid or payable pursuant to this Article VI , or the performance of its other obligations set forth in this Agreement. For any given Service, each Party shall have the right to audit the books, records and facilities of the other Party pertaining to such Service once for each twelve month period during which payment obligations are due (and at such other times as may be required by

 

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applicable law). Each Party shall also have the right to audit (or cause an independent Third Party auditor to audit) the books, records and facilities of the other Party pertaining to a particular Service within six months after the termination of such Service.

(b) Any audit shall be conducted during regular business hours and in a manner that complies with the building and security requirements of the Party being audited. Such audits shall not interfere unreasonably with the operations of the Party being audited. The Party desiring to conduct an audit shall provide notice to the Party to be audited not less than 30 days prior to the commencement of the audit and shall specify the date on which the audit will commence. The Party conducting an audit shall pay the costs of conducting such audit, unless the results of an audit reasonably indicate an overpayment by the Party conducting the audit of 10% or more (such percentage to be determined by reference to the Services which are subject to the specific audit), in which case the Party being audited shall pay the reasonable out-of-pocket costs of the Party conducting such audit. If the audit reasonably concludes that an overpayment or underpayment has occurred during the audited period, such payment shall be remitted by the Party responsible for such payment to the other Party within 30 days after notice to the Party responsible for such payment.

ARTICLE VII

INDEPENDENCE; OWNERSHIP OF ASSETS

Section 7.1 Independence . All employees and representatives of a Party and any of its Affiliates will be deemed for purposes of all compensation and employee benefits to be employees or representatives of such Party or its Affiliates (or their subcontractors) and not employees or representatives of the other Party or any of its Affiliates. In providing the Services, such employees and representatives will be under the direction, control and supervision of the Party or its Affiliates (or their subcontractors) providing such Services, and not of the Party receiving such Services. The Party or its Affiliates (or their subcontractors) providing the Services will have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such employees and representatives.

Section 7.2 Ownership of Assets . (a)  First Data Systems . First Data Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the First Data Parties and their suppliers. From and after the creation of any and all such First Data Systems or enhancements thereof or improvements thereto by Western Union or by any contractor, Affiliate or other Third Party on Western Union’s behalf, in each case, pursuant to this Agreement, Western Union agrees to assign and hereby assigns to First Data or the applicable First Data Party, any and all right, title and interest that Western Union or such contractor, Affiliate or Third Party may have in such First Data Systems or enhancements thereof or improvements thereto.

(b) Western Union Systems . Western Union Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the Western Union Parties and their suppliers. From and after the creation of any and all such Western Union Systems or enhancements thereof or improvements thereto by First Data or by any contractor, Affiliate or Third Party on First Data’s behalf, in each case, pursuant to this Agreement, First

 

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Data agrees to assign and hereby assigns to Western Union or the applicable Western Union Party, any and all right, title and interest that First Data or such contractor, Affiliate or Third Party may have in such Western Union Systems or enhancements thereof or improvements thereto.

(c) License . During the Term, each Party grants to the other and its respective suppliers a non-exclusive, royalty-free right and license to use the First Data Systems or the Western Union Systems, as applicable, solely to provide the Services contemplated hereunder. Notwithstanding anything to the contrary hereunder, each Party agrees to cooperate with the other (and shall cause its suppliers to so cooperate) to cause the orderly return of the other Party’s Systems and property upon the expiration of the Term or upon written request, whichever is earlier.

(d) Maintenance . With respect to any Systems that a First Data Party or a Western Union Party, as applicable, is required to maintain or enhance hereunder, such First Data Party or Western Union Party shall maintain the existing documentation and make any revisions to such documentation resulting from such enhancements. All right, title and interest in and to such enhancements and such documentation, whether created by the Party that provides the Service or any contractor, Affiliate or supplier on such Party’s behalf, shall be owned exclusively by and vested exclusively in the Party which owns the applicable System.

(e) Data Ownership . As between any First Data Party, on the one hand, and any Western Union Party, on the other hand, all right, title and interest in and to all data processed hereunder shall be owned exclusively by the First Data Party or Western Union Party that originally supplied it to the other. First Data and Western Union hereby assign to the other, and shall cause any of its or their contractors, Affiliates or suppliers to assign to the other, as applicable, all right, title and interest that First Data or Western Union, as applicable, may have in the other’s data.

(f) Third Party Suppliers . Each Party shall have written agreements with its employees consistent with past practices, and shall cause any contractor, Affiliate or Third Party performing Services on its behalf pursuant to this Agreement to also have written agreements with its employees that are consistent with its obligations hereunder, including the obligations to disclose and assign all right, title and interest in intellectual property rights as contemplated in this Section 7.2 and Article VIII . Each Party agrees not to voluntarily terminate or to amend or modify such agreements with respect to the provisions described above without providing at least 30 days prior written notice thereof and further agrees that any such amendments or modifications to such agreements shall be prospective only.

Section 7.3 Other Assets . Except as otherwise noted in Sections 7.1 and 7.2 , all procedures, methods, systems, strategies, tools, equipment, facilities and other resources used by a Party, any of its Affiliates or any Third Party service provider in connection with the provision of the Services hereunder shall remain the property of such Party, its Affiliates or such service providers and, except as otherwise provided herein, shall at all times be under the sole direction and control of such Party, its Affiliates or such Third Party service provider.

 

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ARTICLE VIII

CONFIDENTIALITY

Section 8.1 Confidentiality . Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of the confidentiality provisions set forth in Section 14.8 of the Distribution Agreement.

ARTICLE IX

NO AGENCY RELATIONSHIP

Section 9.1 No Agency Relationship . Nothing in this Agreement shall be deemed to make either Party or its Affiliates the agent of the other Party or its Affiliates.

ARTICLE X

TERMINATION

Section 10.1 General . This Agreement shall terminate, and the obligation of each Party to provide all Services shall cease, on the earliest to occur of (i) the date on which the provision of all Services has been terminated by the Parties pursuant to Section 3.3 , subject to the terms of Section 3.3 , or (ii) the date on which the Term of this Agreement has ended pursuant to Section 2.1 or 10.2 .

Section 10.2 Termination of Entire Agreement . A Party shall have the right to terminate this Agreement or effect a partial termination effective upon delivery of written notice to the other Party if the other Party: (a) makes an assignment for the benefit of creditors, or becomes bankrupt or insolvent, or is petitioned into bankruptcy, or takes advantage of any state, federal or foreign bankruptcy or insolvency act, or if a receiver or receiver/manager is appointed for all or any substantial part of its property and business and such receiver or receiver/manager remains undischarged for a period of 30 days; or (b) materially defaults in the performance of any of its covenants or obligations contained in this Agreement (or, in the case of a partial termination, with respect to the Services being terminated) and such default is not remedied to the nondefaulting Party’s reasonable satisfaction within 45 days after receipt of written notice by the defaulting Party informing such Party of such default, or if such default is not capable of being cured within 45 days, if the defaulting Party has not promptly begun to cure the default within such 45 day period and thereafter proceeded with all diligence to cure the same.

Section 10.3 Procedures on Termination . Following any termination of this Agreement in whole or in part, each Party will cooperate with the other Party as reasonably necessary to avoid disruption of the ordinary course of the other Party’s and its Affiliates’ business. Termination shall not affect any right to payment for Services provided prior to termination.

Section 10.4 Effect of Termination . Sections 3.4(c) , 4.3 , Article V (with respect to Fees and Taxes attributable to periods prior to termination), 6.1 , 6.2 , 6.4 , 6.5 , 10.3 , this Section 10.4 and Articles I , VII , VIII , XI and XII shall survive any termination of this Agreement. For the avoidance of doubt, neither (a) termination of a particular Service hereunder nor (b)

 

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termination of this Agreement with respect to the Services provided under one Annex, but not the other Annex, shall be a termination of this Agreement.

ARTICLE XI

INDEMNIFICATION

Section 11.1 Indemnification by Western Union . Western Union shall indemnify, defend and hold harmless the First Data Indemnified Parties for any Losses and Expenses incurred by them in connection with or arising out of any (i) material breach of this Agreement by Western Union, its Affiliates, employees, suppliers or contractors, (ii) Western Union’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith in the provision of the Western Union Services by Western Union, its Affiliates, employees, suppliers or contractors pursuant to this Agreement, (iii) any Action that determines that the provision by any Western Union Party and/or the receipt by the First Data Indemnified Parties of any Western Union Services infringes upon or misappropriates the intellectual property of any Third Party, to the extent that any such Losses and Expenses are determined to have resulted from Western Union’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith, and (iv) Third Party claims arising out of the provision of the First Data Services, except to the extent that such third Person claims for Losses and Expenses are finally determined by a final non-appealable decision of a court having jurisdiction over Western Union and First Data or pursuant to Article XIII of the Distribution Agreement to have arisen out of the material breach of this Agreement, gross negligence, bad faith or willful misconduct of First Data, its Affiliates, employees, suppliers or contractors in providing the First Data Services.

Section 11.2 Indemnification by First Data . First Data shall indemnify, defend and hold harmless the Western Union Indemnified Parties for any Losses and Expenses incurred by them in connection with or arising out of (i) any material breach of this Agreement by First Data, its Affiliates, employees, suppliers or contractors, (ii) First Data’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith in the provision of the First Data Services by First Data, its Affiliates, employees, suppliers or contractors pursuant to this Agreement, (iii) any Action that determines that the provision by any First Data Party and/or the receipt by the Western Union Indemnified Parties of any First Data Services infringes upon or misappropriates the intellectual property of any Third Party to the extent that any such Losses and Expenses are determined to have resulted from First Data’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith, and (iv) Third Party claims arising out of the provision of the Western Union Services, except to the extent that such Losses and Expenses are finally determined by a final non-appealable decision of a court having jurisdiction over First Data and Western Union or pursuant to Article XIII of the Distribution Agreement to have arisen out of the material breach of this Agreement, gross negligence, bad faith or willful misconduct of Western Union, its Affiliates, employees, suppliers or contractors in providing the Western Union Services.

Section 11.3 Limitations and Liability . Each Party shall have a duty to mitigate the Losses and Expenses for which the other is responsible hereunder. Except for Losses or Expenses arising out of or related to the gross negligence or willful misconduct of the defaulting Party or in respect of Article VIII , in no event shall a Party’s (including its Affiliates’,

 

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employees’, contractors’ or suppliers’) cumulative aggregate liability arising under or in connection with this Agreement (or the provision of Services hereunder) exceed the greater of $10,000,000 and the amount of payments received by such Party from the other Party pursuant to this Agreement. EXCEPT FOR CLAIMS ARISING OUT OF OR RELATING TO ARTICLE VIII, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS OF REVENUES OR PROFITS), EXEMPLARY OR PUNITIVE DAMAGES OR THE LIKE ARISING UNDER ANY LEGAL OR EQUITABLE THEORY OR ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT (OR THE PROVISION OF SERVICES HEREUNDER), ALL OF WHICH ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER OR NOT ANY PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

Section 11.4 Indemnification Is Exclusive Remedy . Except for equitable relief and rights pursuant to Section 6.3 or Article X , the indemnification provisions of this Article XI shall be the exclusive remedy for breach of this Agreement.

Section 11.5 Risk Allocation . Each Party agrees that the Fees charged under this Agreement reflect the allocation of risk between the Parties, including the disclaimer of warranties in Section 3.4(a) and the limitations on liability in Section 11.3 . Modifying the allocation of risk from what is stated here would affect the Fees that each Party charges, and in consideration of those Fees, each Party agrees to the stated allocation of risk.

Section 11.6 Indemnification Procedures . All claims for indemnification pursuant to this Article XI shall be made in accordance with the provisions set forth in Sections 12.6 and 12.7 of the Distribution Agreement. Notwithstanding anything to the contrary hereunder, no cause of action, dispute or claim for indemnification may be asserted against either Party or submitted to arbitration or legal proceedings which accrued more than two years after the later of (a) the occurrence of the act or event giving rise to the underlying cause of action, dispute or claim and (b) the date on which such act or event was, or should have been, in the exercise of reasonable due diligence, discovered by the Party asserting the cause of action, dispute or claim.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Entire Agreement . This Agreement, including the Annexes hereto and the sections of the Distribution Agreement referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.

Section 12.2 Choice of Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware.

 

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Section 12.3 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.

Section 12.4 Waiver . 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 given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or 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.

Section 12.5 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a 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 or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

Section 12.6 Execution in Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed 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 and delivered to each of the Parties.

Section 12.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).

Section 12.8 Third Party Beneficiaries . Except to the extent otherwise provided in Article XI, the provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.

Section 12.9 Notices . All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when delivered or mailed in accordance with the terms of Section 15.9 of the Distribution Agreement.

 

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Section 12.10 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Affiliate of such Party.

Section 12.11 No Public Announcement . Neither First Data nor Western Union 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 either Party shall be so obligated by law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use 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 applicable law, accounting and SEC disclosure obligations or the rules of any stock exchange.

Section 12.12 Limited Liability . Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of such Party under this Agreement and, to the fullest extent legally permissible, each of Western Union and First Data, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law.

Section 12.13 Mutual Drafting . This Agreement shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

Section 12.14 Dispute Resolution . The Parties agree that any dispute, controversy or claim between them with respect to the matters covered hereby shall be governed by and resolved in accordance with the procedures set forth in Section 4.3 hereof and in Article XIII of the Distribution Agreement.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their authorized representatives as of the date first above written.

 

FIRST DATA CORPORATION
By:   /s/ Kimberly S. Patmore
  Name:   Kimberly S. Patmore
  Title:   Executive Vice President and Chief Financial Officer

 

THE WESTERN UNION COMPANY
By:   /s/ David G. Barnes
  Name:   David G. Barnes
  Title:   Executive Vice President Finance and Strategic Development


Annex A

AUTHORIZED REPRESENTATIVES

[Omitted]


Annex B

FIRST DATA SERVICES AND FEES

[Omitted]


Annex C

WESTERN UNION SERVICES AND FEES

[Omitted]


Annex D

THIRD PARTY SOFTWARE

[Omitted]

Exhibit 10.4

PATENT OWNERSHIP AGREEMENT AND COVENANT NOT TO SUE

This Agreement is entered into and made effective as of the 29th day of September, 2006, by and between First Data Corporation, a Delaware corporation, having a principal place of business at 6200 S. Quebec Street, Greenwood Village, CO 80111 (hereinafter “First Data”) and The Western Union Company, a Delaware corporation having a principal place of business at 12500 E. Belford Ave., Englewood, CO 80112 (hereinafter “Western Union”).

1.0 BACKGROUND

The parties have entered into the Separation Agreement, under which they have agreed to their separation into two separately traded public companies (the “Separation”). The parties desire to provide for ownership and other rights to patents that have previously been owned by the parent company prior to the Separation. Accordingly, the parties agree as follows:

2.0 DEFINITIONS

The following capitalized terms, whether in singular of plural form, shall have the meanings set forth below for all purposes of this Agreement:

Affiliate ” shall mean, when used with reference to a specific Person, any Person that, directly or indirectly, or through one or more intermediaries, owns or controls, is owned or controlled by, or is under common ownership or common control with, such specific Person. As used herein, “control” means the power to direct the management or affairs of a Person and “ownership” means the beneficial ownership of more than 50% of the voting equity securities of the Person.

Business Unit ” shall mean assets, liabilities and employees of a party that while not necessarily organized as a separate corporation or other legal entity is regarded by the party as a distinct unit for purposes of profit and loss management, or which is designated for the specific purpose of disposition as an operating entity by a party.

Contribution” shall have the same meaning as in the Separation Agreement.

Control ” shall mean the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.

First Data Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit A attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit A, and (c) divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.

First Data Controlled Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit B attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention


disclosures identified in Exhibit B, and (c) divisions, continuations, continuations-in-part (but only to the extent claims are supported by the specifications of those patents), re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.

Separation Agreement ” shall mean the Separation and Distribution Agreement dated September 29, 2006 between the parties.

Subsidiary ” shall mean (a) a corporation or other legal entity Controlled by a party or (b) a Business Unit. Any such corporation, other legal entity or Business Unit shall be deemed a Subsidiary of a party only so long as it is Controlled by that party.

Western Union Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit C attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit C, and (c) divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.

Western Union Controlled Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit D attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit D, and (c) divisions, continuations, continuations-in-part (but only to the extent claims are supported by the specifications of those patents), re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.

3.0 OWNERSHIP OF WESTERN UNION PATENTS AND FIRST DATA PATENTS

3.1 At the time of The Contribution, Western Union shall become the sole and exclusive owner of all right, title and interest in the Western Union Patents, including the right to sue for past infringement.

3.2 At the time of The Contribution, First Data shall continue as the sole and exclusive owner of all right, title and interest in the First Data Patents, including the right to sue for past infringement.

3.3 The parties agree to file appropriate assignment documents with the U. S. Patent and Trademark Office (and at appropriate non-U. S. patent offices for corresponding non-U. S. patents) and reasonably cooperate with each other in order to effect and record the ownership of the Western Union Patents and the First Data Patents as provided under this Section 3.0. The cost of such assignment documents and their filing shall be born by Western Union for the Western Union Patents, and shall be born by First Data for the First Data Patents.

 

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4.0 OWNERSHIP OF WESTERN UNION CONTROLLED PATENTS AND FIRST DATA CONTROLLED PATENTS

4.1 At the time of The Contribution, Western Union and First Data shall each have, as joint owners, an undivided interest in and to all right, title and interest in both the Western Union Controlled Patents and the First Data Controlled Patents.

4.2 The parties agree to file appropriate assignment documents with the U. S. Patent and Trademark Office (and at appropriate non-U. S. patent offices for corresponding non-U.S. patents) and reasonably cooperate with each other in order to effect and record the joint ownership of the Western Union Controlled Patents and the First Data Controlled Patents as provided under this Section 4.0. The cost of such assignment documents and their filing shall be born by Western Union for the Western Union Controlled Patents, and shall be born by First Data for the First Data Controlled Patents. It is understood that the parties may delay the recording of assignment documents in jurisdictions outside of the U.S. for cost, administrative convenience or other reasons, but any such delay in recording shall not operate as a waiver or otherwise affect the ownership of patents as provided herein. In the event of such delay and if a prompt recording should thereafter become necessary for carrying out any purpose of this Agreement, the parties agree to proceed with such recording in a reasonably expeditious manner.

4.3 Western Union and First Data shall each have, as joint owners, full right to practice the inventions claimed in the Western Union Controlled Patents and the First Data Controlled Patents. The scope of such rights shall be comparable to the scope of rights granted under Section 5.0 below (and subject to Sections 6.0 and 7.0 below).

4.4 Western Union shall have the right (in its sole discretion) to transfer its joint ownership interest in the Western Union Controlled Patents, but not the First Data Controlled Patents (subject to Paragraph 9.3). First Data shall have the right (in its sole discretion) to transfer its joint ownership interest in the First Data Controlled Patents, but not the Western Union Controlled Patents (subject to Paragraph 8.3).

4.5 Western Union hereby agrees to provide all commercially reasonable cooperation to First Data regarding notification of significant events in the process of prosecuting the Western Union Controlled Patents. First Data hereby agrees to provide all commercially reasonable cooperation to Western Union regarding notification of significant events in the process of prosecuting the First Data Controlled Patents. Such commercially reasonable cooperation includes but is not limited to, making inventors who are employed by a party available for review of amendments and signature of documents and providing copies of documents.

 

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5.0 IMMUNITY AS TO WESTERN UNION PATENTS AND FIRST DATA PATENTS

5.1 Western Union (on behalf of itself and its Subsidiaries) hereby grants to First Data and its Subsidiaries:

(a) an immunity from patent infringement claims, actions and suits based on any act which, if not licensed hereunder, would infringe, contributorily infringe or induce the infringement of any Western Union Patent, and

(b) pursuant to such immunity, a worldwide, royalty-free, non-exclusive license under the Western Union Patents to (i) make, have made (including authorizing others to provide to First Data for its own use), use (on behalf of First Data or for the benefit of its customers), have used, sell, offer to sell, lease, import and otherwise transfer any machine, system, process or product, or any component thereof, (ii) provide and have provided any service, (iii) provide and have provided any software to third parties, and (iv) practice and have practiced any process or method.

5.2 First Data (on behalf of itself and its Subsidiaries) hereby grants to Western Union and its Subsidiaries:

(a) an immunity from patent infringement claims, actions and suits based on any act which, if not licensed hereunder, would infringe, contributorily infringe or induce the infringement of any First Data Patent, and

(b) pursuant to such immunity, a worldwide, royalty-free, non-exclusive license under the First Data Patents to (i) make, have made (including authorizing others to provide to Western Union for its own use), use (on behalf of First Data or for the benefit of its customers), have used, sell, offer to sell, lease, import and otherwise transfer any machine, system, process or product, or any component thereof, (ii) provide and have provided any service, (iii) provide and have provided any software to third parties, and (iv) practice and have practiced any process or method.

5.3 Except as specifically provided otherwise in this Agreement, the immunity and licenses granted under this Section 5.0 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization and not related to acquisition of the assigning party by a third party), and do not include the right to sublicense any other party unless such sublicense is granted to a third party for the exclusive purpose of having products, processes, services, etc. provided to a Party.

5.4 The immunity and licenses granted under this Section 5.0 extend to and from Subsidiaries of the parties. Each Subsidiary shall be bound by the terms and conditions of this Agreement as if it were a named party hereto. If at any time a Subsidiary of a party ceases to be a Subsidiary, then (a) any immunity and licenses to such Subsidiary under the patents of the

 

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other party shall continue, but only to the business operations of the Subsidiary (and its products and services) existing at the time it ceased to be a Subsidiary, and (b) any immunity and licenses on behalf of such Subsidiary to the other party shall continue, notwithstanding its ceasing to be a Subsidiary.

5.5 Nothing in this Section 5.0 shall be deemed an obligation on the part of either party to provide trade secrets, know-how or any technical information to the other, nor shall be construed as granting by implication, estoppel or otherwise any rights or licenses other than those expressly stated. Subject to either Party’s rights in patents, either Party shall be free to use any ideas, concepts, or know-how that may be or was learned, exchanged, or developed while Western Union was a subsidiary of First Data without compensation to the other Party insofar as such ideas, concepts and know-how are retained in the unaided memory of the employees of either Western Union or First Data.

5.6 Nothing in this Section 5.0 shall be deemed a grant of immunity from any claim, action, or suit other than as specifically provided herein.

6.0 LICENSING OF WESTERN UNION CONTROLLED PATENTS

6.1 Western Union shall have the exclusive right (as between itself and First Data) to grant licenses under the Western Union Controlled Patents. The grant of any such license, and the terms thereof, shall be within the sole discretion of Western Union, but subject to the rights granted to First Data under Sections 4.0 and 8.0. First Data shall have no right to an accounting by Western Union or to otherwise share in any royalties received by Western Union under any such license.

6.2 Upon written request of First Data, such request identifying a specific Western Union Controlled Patent and a third party, Western Union shall notify First Data in writing whether such third party has been granted a license under that Western Union Controlled Patent.

7.0 LICENSING OF FIRST DATA CONTROLLED PATENTS

7.1 First Data shall have the exclusive right (as between itself and Western Union) to grant licenses under the First Data Controlled Patents. The grant of any such license, and the terms thereof, shall be within the sole discretion of First Data, but subject to the rights granted to Western Union under Sections 4.0 and 9.0. Western Union shall have no right to an accounting by First Data or to otherwise share in any royalties received by First Data under any such license.

7.2 Upon written request of Western Union, such request identifying a specific First Data Controlled Patent and a third party, First Data shall notify Western Union in writing whether such third party has been granted a license under that First Data Controlled Patent.

 

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8.0 ASSERTION OF WESTERN UNION CONTROLLED PATENTS

8.1 Western Union, and not First Data, shall have the sole and exclusive right (in its sole discretion) to assert and bring legal action against others for infringement (including past infringement) of the Western Union Controlled Patents, except under the limited circumstances provided in Paragraph 8.2 below. First Data agrees to be bound by any decision in such action as to the affected Western Union Controlled Patents. If, notwithstanding the foregoing, First Data is required by law or by the court to be a party to such action, First Data shall waive venue and permit itself to be joined as a party; however, in this instance, First Data shall not incur any expenses as a joined party. Settlement decisions shall be made, with respect to the Western Union Controlled Patents, by Western Union, unless First Data has been joined voluntarily as a party. If First Data joined voluntarily as a party, settlement decisions shall be made jointly with the cost of settlement and any benefits being shared between the Parties pursuant to Section 8.2.

8.2 As the only exception to the sole and exclusive right of Western Union to assert the Western Union Controlled Patents, should legal action be brought against First Data in any jurisdiction claiming infringement by First Data of a patent of a third party issued in the U. S. or any other country, then First Data may assert any one or more of the Western Union Controlled Patents against such third party for infringement (including past infringement) thereof, by bringing legal action for monetary and equitable relief against such third party with Western Union’s written consent, which shall not be unreasonably withheld. In determining whether Western Union is acting reasonably, it may take into account all appropriate factors including i) value of the suit; ii) value of the Western Union Controlled Patent; iii) the presence of a good faith belief of infringement of the patent by the third party’s methods, systems or processes, iv) likelihood of success on the merits; v) the potential harm to Western Union if the Western Union Controlled Patent were to be invalidated or its claims limited; and vi) the effort and/or expense that First Data would have to incur in order to modify its product or service to avoid infringement. First Data may not grant a license under the Western Union Controlled Patents in settlement of such action, without the prior written approval and authorization of (and agreed compensation to) Western Union. Under the limited circumstances provided under this Paragraph 8.2, First Data shall provide written notice of its intent to assert such patents. Such notice shall include (a) the name of the third party, (b) the circumstances (including relevant dates) leading to such assertion, and (c) a summary of all information known to First Data relating to the infringement by the third party, and shall be delivered to Western Union at least thirty (30) days prior to First Data’s proposed commencement of an infringement action. Any such assertion shall have a good faith and reasonable basis for claiming infringement by the third party. Western Union shall have the right (to be exercised within ten (10) days after receiving the assertion notice) to have both parties jointly retain counsel (skilled in patent law and selected by mutual agreement) to assist in determining whether to grant or withhold its consent as provided in this paragraph, with such advice and related discussions to be maintained as privileged and confidential. Such determination shall be made within thirty (30) days after delivery of the assertion notice from First Data. If Western Union does not respond to the notice within thirty (30) days, First Data may commence the action.

 

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Western Union may, at its option, elect to join as a voluntary party to such legal action prior to its commencement, in which event Western Union shall (a) share equally in the cost (including attorney fees) of such action, (b) have the right to participate (in good faith) in such action with counsel of its own choosing and at its own expense, (c) be entitled to share equally in all damages that may be awarded (or made in settlement) against the third party on account of the Western Union Controlled Patents after deduction of both parties’ costs (including attorney fees), and (d) have control over any matters that affect or are likely to affect the validity or enforceability (including future economic value) of the Western Union Controlled Patents, including the future enforceability against such third party. First Data shall have control over all other matters arising in such action or its settlement (provided any settlement relating to the Western Union share of damages is agreed to by Western Union).

If Western Union declines to join as a voluntary party to such action prior to its commencement, it agrees to be bound by any decision in or settlement of such action as to the affected Western Union Controlled Patents. In such event, all costs and expenses of such action shall be borne by First Data, and First Data shall be entitled to receive all damages that may be awarded (or made in settlement). If notwithstanding the foregoing, Western Union is required by law or by the court to be a party to such action, Western Union shall waive venue and permit itself to be joined as a party.

8.3 The rights granted to First Data under Section 8.2 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization not related to the acquisition of First Data by a third party).

9.0 ASSERTION OF FIRST DATA CONTROLLED PATENTS

9.1 First Data, and not Western Union, shall have the sole and exclusive right (in its sole discretion) to assert and bring legal action against others for infringement (including past infringement) of the First Data Controlled Patents, except under the limited circumstances provided in Paragraph 9.2 below. Western Union agrees to be bound by any decision in such action as to the affected First Data Controlled Patents. If, notwithstanding the foregoing, Western Union is required by law or by the court to be a party to such action, Western Union shall waive venue and permit itself to be joined as a party; however, in this instance Western Union shall not incur any expenses as a joined party. Settlement decisions shall be made, with respect to the First Data Controlled Patents, by First Data, unless Western Union has been joined as a party. If Western Union joined voluntarily as a party, settlement decisions shall be made jointly, with cost of settlement and any benefits being shared between the Parties pursuant to Section 9.2.

9.2 As the only exception to the sole and exclusive right of First Data to assert the First Data Controlled Patents, should legal action be brought against Western Union in any jurisdiction claiming infringement by Western Union of a patent of a third party issued in the U. S. or any other country, then Western Union may assert any one or more of the First Data Controlled Patents against such third party for infringement (including past infringement) thereof, by bringing legal action for monetary and equitable relief against such third party with First Data’s written consent, which shall not be unreasonably withheld. In determining whether

 

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First Data is acting reasonably, it may take into account all appropriate factors including i) value of the suit; ii) value of the First Data Controlled Patent; iii) the presence of a good faith belief of infringement of the patent by the third party’s methods, systems or processes, iv) likelihood of success on the merits; v) the potential harm to First Data if the First Data Controlled Patent were to be invalidated or its claims limited; and vi) the effort and/or expense that Western Union would have to incur in order to modify its product or service to avoid infringement Western Union may not grant a license under the First Data Controlled Patents in settlement of such action, without the prior written approval and authorization of (and agreed compensation to) First Data. Under the limited circumstances provided under this Paragraph 9.2, Western Union shall provide written notice of its intent to assert such patents. Such notice shall include (a) the name of the third party, (b) the circumstances (including relevant dates) leading to such assertion, and (c) a summary of all information known to Western Union relating to the infringement by the third party, and shall be delivered to First Data at least thirty (30) days prior to Western Union’s commencement of an infringement action. Any such assertion shall have a good faith and reasonable basis for claiming infringement by the third party. First Data shall have the right (to be exercised within ten (10) days after receiving the assertion notice) to have both parties jointly retain counsel (skilled in patent law and selected by mutual agreement) to assist in determining whether to grant or withhold its consent as provided in this paragraph, with such advice and related discussions to be maintained as privileged and confidential. Such determination shall be made within thirty (30) days after delivery of the assertion notice from Western Union. If First Data does not respond to the notice within thirty (30) days, Western Union may commence the action.

First Data may, at its option, elect to join as a voluntary party to such legal action prior to its commencement, in which event First Data shall (a) share equally in the cost (including attorney fees) of such action, (b) have the right to participate (in good faith) in such action with counsel of its own choosing and at its own expense, (c) be entitled to share equally in all damages that may be awarded (or made in settlement) against the third party on account of the First Data Controlled Patents after deduction of both parties’ costs (including attorney fees) and (d) have control over any matters that affect or are likely to affect the validity or enforceability (including future economic value) of the First Data Controlled Patents, including the future enforceability against such third party. Western Union shall have control over all other matters arising in such action or its settlement (provided any settlement relating to the First Data share of damages is agreed to by First Data).

If First Data declines to join as a voluntary party to such action prior to its commencement, it agrees to be bound by any decision in or settlement of such action as to the affected First Data Controlled Patents. In such event, all costs and expenses of such action shall be borne by Western Union, and Western Union shall be entitled to receive all damages that may be awarded (or made in settlement). If notwithstanding the foregoing, First Data is required by law or by the court to be a party to such action, First Data shall waive venue and permit itself to be joined as a party.

9.3 The rights granted to Western Union under Section 9.2 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization not related to acquisition of Western Union by a third party).

 

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10.0 JOINTLY OWNED PATENTS — PROSECUTION AND MAINTENANCE

10.1 Western Union shall have sole control over and be responsible for the prosecution and maintenance of the Western Union Controlled Patents (including all costs and expenses in connection therewith). In the event Western Union decides to abandon any Western Union Controlled Patent, it shall use reasonable efforts to notify First Data in writing at least thirty (30) days prior to such abandonment. Upon such notification, First Data may, at its option, elect to assume full and complete control over and bear all costs in connection with such patent. Upon such election, Western Union agrees to promptly transfer all of its ownership interest in such patent to First Data, and thereafter such patent shall be deemed a First Data Patent for purposes of this Agreement (with immunity and licenses under such patent conveyed to Western Union pursuant to Section 5.0 above).

10.2 First Data shall have sole control over and be responsible for the prosecution and maintenance of the First Data Controlled Patents (including all costs and expenses in connection therewith). In the event First Data decides to abandon any First Data Controlled Patent, it shall use reasonable efforts to notify Western Union in writing at least thirty (30) days prior to such abandonment. Upon such notification, Western Union may, at its option, elect to assume full and complete control over and bear all costs in connection with such patent. Upon such election, First Data agrees to promptly transfer all of its ownership interest in such patent to Western Union, and thereafter such patent shall be deemed a Western Union Patent for purposes of this Agreement (with immunity and licenses under such patent conveyed to First Data pursuant to Section 5.0 above).

10.3 Upon request, each party will provide to the other a copy of any patent issuing after the date of this Agreement, for which such party has the responsibility for prosecution and maintenance under this Section 10. Such party shall also permit the other, at its expense, to inspect and make copies of the content of its file wrapper (as it customarily maintains such file, but excluding any attorney-client privileged material) for any such patent at any time prior to or after issuance.

10.4 The party having responsibility for prosecution and maintenance under this Section 10.0 shall have sole discretion as to all matters pertaining to such prosecution and maintenance, and shall have no liability to the other for any action, failure to take action or decision in connection therewith, including for abandonment or for failure to notify the other of abandonment as required in Paragraphs 10.1 or 10.2. Notwithstanding any other provision in this Agreement, the party not having responsibility for prosecution and maintenance can request in writing the ability to file any divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such patents controlled by the other party, provided that any such divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals shall meet applicable laws and regulations governing the filing of such patents.

10.5 Each party shall provide, upon request of the other, reasonable cooperation (including making inventor-employees reasonably available) to the other as may be required in

 

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the course of prosecution and enforcement of the Western Union Controlled Patents or the First Data Controlled Patents, at the requesting party’s expense.

11.0 LICENSING AND ENFORCEMENT DISCUSSIONS; THIRD PARTY INFRINGEMENT; INDEMNIFICATION

11.1 If either party becomes aware of infringement by a third party of any jointly owned patent controlled by the other party, it shall notify the other party in writing of such infringement.

11.2 If one party is required by law or by a court to be a party to an action (by virtue of being a joint owner, and after having elected not to be a party to the action) against a third party brought by the other, such party shall appear as a party to such action and be indemnified by the other party against any costs and expenses (including reasonable attorney fees) in connection with such action. If one party enforces a patent (and the other party is not a party to such enforcement action), the other party shall be indemnified by the first party against any costs and expenses (including reasonable attorney fees) in connection with such action.

12.0 TERM

The term of this Agreement shall be from the date hereof until the expiration of the last to expire of the Western Union Patents, First Data Patents, Western Union Controlled Patents, and First Data Controlled Patents, with the term as respects each individual Patent expiring on the date that the patent expires or otherwise becomes abandoned, unenforceable, or invalid.

13.0 ACQUISITION OF A PARTY

13.1 In the event either party is Acquired by a third party (“Buyer”) at any time during the term of this Agreement, then:

(a) the immunity and licenses granted under Section 5.0 shall continue for both parties, but as to the Acquired party such immunity and licenses shall extend only to the business operations of the Acquired party (and its products and services) existing at the time of acquisition, and shall not extend to the Buyer as a whole;

(b) if Western Union is the Acquired party, it shall transfer, effective upon the date of its acquisition, all of its ownership rights in the First Data Controlled Patents to First Data and such patents shall thereafter be deemed First Data Patents for purposes of this Agreement (including Section 5.0 above); and

(c) if First Data is the Acquired party, it shall transfer, effective upon the date of its acquisition, all of its ownership rights in the Western Union Controlled Patents to Western Union and such patents shall thereafter be deemed Western Union Patents for purposes of this Agreement (including Section 5.0 above).

 

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13.2 Any transfer of ownership pursuant to Paragraph 13.1(b) and 13.1(c) above shall be subject to any prior licenses granted by the transferor, and such transfer shall not operate to release the transferor from any obligations it has under such prior license or to impose any such obligations on the transferee.

13.3 For purposes of this Agreement, an entity shall be “Acquired” if (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes a beneficial owner (or otherwise has the authority to vote), directly or indirectly, securities representing more than 50% of the total voting power of such entity’s then outstanding voting securities, or (ii) such entity becomes a party to a merger, consolidation or share exchange (other than a re-incorporation or the establishment of a holding company involving no change in ownership of the entity) and either (x) such entity is not in substance the surviving corporation or (y) as a result of such transaction, such entity’s board of directors is reconstituted so that a majority of such board of directors consists of individuals who were not directors prior to such transaction. Notwithstanding the foregoing, an entity shall not be deemed “Acquired” in the event of an internal corporate reorganization not involving a third party.

14.0 ALLOCATION OF PATENTS

It is acknowledged by both parties that reasonable efforts have been undertaken prior to the Separation to allocate the patents previously owned by their combined businesses, with the allocation based on the overall relevance of individual patents to one party or the other. If, after the date of this Agreement, either party notifies the other of a reasonable basis for believing that a patent has been improperly allocated to one party (solely owned or controlled by that party) when it should have been allocated to the other, both parties agree to negotiate in good faith to determine the proper allocation of such patent and to establish any other terms as may be equitable in connection with such patent or its allocation to the proper party.

15.0 MISCELLANEOUS

15.1 Confidentiality . Information concerning the First Data Patents and the Western Union Patents, to the extent it meets the definition of Confidential Information under the Separation Agreement, shall be the Confidential Information of First Data and Western Union, respectively, under the Separation Agreement. However, nothing herein shall preclude either party from responding to a third party inquiry as to the scope of its licensing or enforcement rights under any patent which is the subject of this Agreement.

15.2 Headings and Interpretation . Regardless of which Party may have drafted this Agreement or any part thereof, no rule of strict construction shall be applied against either Party or any of its Affiliates. If any provision of this Agreement is determined by a court of law to be invalid, illegal, or unenforceable pursuant to a judicial decree or decision, the Parties shall deem the provision to be modified to the extent necessary to allow it to be enforced to the extent permitted by law, or if it cannot be so modified, the provision will be severed and deleted from this Agreement, and the remainder of this Agreement shall continue to be binding and enforceable according to its terms. In this Agreement:

(a) references to the singular include references to the plural and words denoting any gender shall include all genders;

 

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(b) the headings in this Agreement do not affect its interpretation;

(c) references to a party to this Agreement include references to its successors or assigns (immediate or otherwise of that party) as such are appointed in accordance with the terms of this Agreement;

(d) references to a clause, section, paragraph or Exhibit are to a clause, section, paragraph or Exhibit to this Agreement and references to this Agreement include the Exhibits;

(e) any reference to a document being “ in writing ” includes any communication made by letter, facsimile transmission or email provided neither party may exercise any rights to terminate this Agreement or any of the services in it or make any notifications under clause 24 (termination) by email;

(f) in the event of any conflict or inconsistency between these Terms and Conditions and any of the other Exhibits or other Agreements as referenced herein, these Terms and Conditions shall prevail to the extent of that conflict or inconsistency unless expressly stated otherwise or agreed by the parties in writing; and,

(g) any reference, express or implied, to an enactment (which includes any legislation in any jurisdiction) includes references to (i) that enactment as re-enacted, amended, extended or applied by or under any other enactment (before or after the signature of this Agreement); or (ii) any subordinate legislation made (before or after the signature of this Agreement) under such enactment.

(h) Words and expressions defined in any clause shall, unless the application of any such word or expression is specifically limited to that clause, bear the meaning assigned to such word or expression throughout this Agreement.

(i) Terms other than those defined within this Agreement and its exhibits will be given their plain English meaning, and those terms, acronyms, and phrases known in the information technology industry will be interpreted in accordance with their generally accepted meanings.

(j) Defined terms appearing in this Agreement and its Schedules in title case shall be given their meaning as defined, while the same terms appearing in lower case shall be interpreted in accordance with their plain English meaning, and shall, unless the context otherwise requires, include the terms as defined.

(k) Reference to months or years shall be construed as calendar months (i.e. one or more of the twelve periods into which a conventional year is divided) or conventional years (i.e. 1 January to 31 December). Reference to “days” shall be construed as calendar days unless qualified by the word “business”, in which instance a “business day” shall be any day other than a Saturday, Sunday

 

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or public holiday. Any reference to “business hours” shall be construed as being the hours between 08h00 (eight hours) and 17h00 (seventeen hours) on any business day. Any reference to time shall be based upon Eastern Standard Time.

(l) Unless specifically otherwise provided, any number of days prescribed shall be determined by excluding the first and including the last day or, where the last day falls on a Saturday, Sunday or public holiday, the next succeeding business day.

(m) Where figures are referred to in numerals and in words, and there is any conflict between the two, the words shall prevail, unless the context indicates a contrary intention.

(n) The words “include” and “including” mean “include without limitation” and “including without limitation”. The use of the words “include” and “including” followed by a specific example or examples shall not be construed as limiting the meaning of the general wording preceding it: the application of the eiusdem generis rule is excluded.

15.3 Severability . If any provision of this Agreement or any document referred to in it is held to be illegal, invalid or unenforceable by any court of competent jurisdiction or Governmental Authority in whole or in part this Agreement shall continue to be valid as to its other provisions and the remainder of the affected provision. The parties shall negotiate in good faith to agree to a substitute provision for any such provision held to be invalid. Any invalidity in one legal jurisdiction shall not affect the validity of any of the provisions of this Agreement in any other legal jurisdiction in which this Agreement may apply or otherwise take effect.

15.4 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Delaware.

15.5 Notices . All notices or other communications required to be given hereunder shall be in writing and delivered either personally or by United States Postal Service, facsimile, or electronic mail, and addressed as provided in this Agreement or as otherwise requested by the receiving party. Notices delivered personally shall be effective upon delivery and notices delivered by mail shall be effective upon their receipt by the party to whom they are addressed. The appropriate addressees are:

 

For Western Union :    For First Data :
Intellectual Property Counsel    Intellectual Property Counsel
12500 E. Belford Ave.    6200 S. Quebec Street
Englewood, CO 80112    Greenwood Village, CO 80111
Fax: (720) 332-0519    Fax: (303) 967-5258

(ii) Dispute Resolution . If the disputing Parties are unable to resolve any Dispute, then such Dispute shall be governed by the Dispute Resolution procedures contained in Article XIII of the Separation Agreement.

 

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15.6 Assignment . This Agreement is personal to the Parties and their Affiliates. Neither this Agreement nor any right or obligation under this Agreement shall be assignable or assumable, without the prior written consent of other Party, which consent may be withheld at the sole discretion of such other Party.

15.7 Survival . The following provisions of this Agreement will survive the expiration or any termination of this Agreement: Sections 3 and 11, and any other provision that by its terms or implication is intended to survive.

15.8 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15.9 Entire Agreement . This Agreement (together with any documents referred to herein) contains the entire agreement and understanding of the parties and supersedes all prior agreements, understandings or arrangements (both oral and written) relating to the subject matter of this Agreement. Each of the parties acknowledges and agrees that:

 

  (i) it does not enter into this Agreement on the basis of and does not rely, and has not relied, upon any statement, representation, warranty, forecast or other information (in any case whether oral, written, express or implied) made, given or agreed to by any person (whether negligently or innocently and whether or not made by a party to this Agreement) which is not expressly contained or referred to in this Agreement (a “ Representation ”);

 

  (ii) nothing in this Agreement is intended to provide any representations or warranties, including any relating to ownership or freedom from infringement, as to any of the First Data Patents, Western Union Patents, First Data Controlled Patents, or Western Union Controlled Patents, or to create any exception to the exclusion of representations and warranties contained in Section 7.1 and 7.2 of the Separation Agreement;

 

  (iii) it shall have no remedy (including any rights to damages or rescission in an action for misrepresentation) for any Representation which was, is or becomes false or misleading;

 

  (iv) the only remedy available in respect of any misleading or false warranty or other term contained in this Agreement shall be a claim for breach of contract under this Agreement

save that nothing in this Agreement shall exclude or restrict a party’s rights, remedies or liability under the law governing this Agreement in respect of any fraud or fraudulent misrepresentation.

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf by its officers thereunto duly authorized, as of the date and year first written above.

 

FIRST DATA CORPORATION
By:   /s/ Kimberly S. Patmore
  Name:   Kimberly S. Patmore
  Title:   Executive Vice President and
Chief Financial Officer

 

THE WESTERN UNION COMPANY
By:   /s/ David G. Barnes
  Name:   David G. Barnes
  Title:  

Executive Vice President

Finance and Strategic Development


EXHIBIT A

FIRST DATA PATENTS

[Omitted]


EXHIBIT B

FIRST DATA CONTROLLED PATENTS

[Omitted]


EXHIBIT C

WESTERN UNION PATENTS

[Omitted]


EXHIBIT D

WESTERN UNION CONTROLLED PATENTS

[Omitted]

Exhibit 10.5

RETAIL MONEY ORDER ISSUANCE AND MANAGEMENT AGREEMENT

By and between

INTEGRATED PAYMENT SYSTEMS INC.

and

WESTERN UNION FINANCIAL SERVICES, INC.

 

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SCHEDULES

 

Schedule 2.1(A)    WU Services
Schedule 2.1(B)    Contract Schedule
Schedule 2.2    Payment for WU Services
Schedule 5.5    IPS Services
Schedule 7.4    Equipment

 

-2-


AGREEMENT

THIS RETAIL MONEY ORDER ISSUANCE AND MANAGEMENT AGREEMENT (this “ Agreement ”), dated as of August 14, 2006, by and between Western Union Financial Services, Inc., a Colorado corporation (“ WU ”) and Integrated Payment Systems Inc., a Delaware corporation (“ IPS ”).

RECITALS

WHEREAS , IPS desires to retain WU to manage IPS’ agents that currently issue and sell money orders at retail locations specified herein and to perform certain data processing and other related services (collectively the “ Services ”); and

WHEREAS , WU desires to perform the Services for IPS, all on the terms and conditions and for the consideration set forth herein.

NOW, THEREFORE , for and in consideration of the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, WU and IPS hereby agree 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 :

Account Manager has the meaning specified in Section 2.4(a) .

Additional Term has the meaning specified in Section 9.1(b) .

Affiliate means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person; provided, however, IPS and WU shall not be considered Affiliates of each other for purposes of this Agreement.

Agreement has the meaning specified in the Preamble.

Business means sale of Money Orders at locations covered by IPS Agreements.

Business Day means any day other than Saturday, Sunday and those legal public holidays specified in 5 U.S.C. §6103(a), as it may be amended from time to time, or any successor provision, on which banking institutions in the city of Denver, Colorado are open for business. If a payment date under this Agreement is not a Business Day, payment shall be made on the next succeeding Business Day.

 

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Claim Notice has the meaning specified in Section 10.4(a) .

Closing Date has the meaning specified in Article IV .

COBRA means the provisions set forth in Sections 601 to 608 of ERISA or Section 4980B of the Code.

Code means the Internal Revenue Code of 1986, as amended.

Confidential Information has the meaning specified in Section 8.2(d).

Contract Schedule means Schedule 2.1 (B).

Counterfeit Item” means a paper payment instrument that is a counterfeit of an Item and the MICR line specifications for that counterfeit item match the MICR line specifications for a Money Order.

Court Order means any judgment, order, award or decree of any foreign, federal, state, local or other court or tribunal and any award in any arbitration proceeding.

Distant Executive has the meaning specified in Section 11.13(b) .

Employee has the meaning specified in Section 8.3 .

Event of Default has the meaning specified in Section 9.3(a) .

Expenses means any and all expenses incurred in connection with investigating, defending or asserting 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, consultants, accountants and other professionals).

Force Majeure means any cause beyond the control of a party that such party is unable to overcome by the exercise of reasonable diligence, which may include fire; flood; explosion; war; strike; embargo; government regulation; civil or military authority; act of God; acts or omissions of carriers; or other similar causes.

Governmental Body means any foreign, federal, state, local or other governmental authority or regulatory body.

Governmental Permits has the meaning specified in Section 5.4 .

Indemnified Party has the meaning specified in Section 10.4(a) .

Indemnifying Party has the meaning specified in Section 10.4(a) .

 

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Initial Term has the meaning specified in Section 9.1(a) .

IPS has the meaning specified in the Preamble. In addition, with respect to business conducted in Canada, the term “IPS” shall include the Integrated Payment Systems Canada Inc., a Canadian corporation, which is a wholly-owned subsidiary of Integrated Payment Systems Inc.

IPS Agreements means the contracts listed on Schedule 2.1 (B) , including any renewals thereof, and the contracts executed pursuant to Schedule 2.1 (A), Section 1 (b)  hereof.

IPS Client means, in the case of each IPS Agreement, the party other than IPS and WU to such IPS Agreement.

IPS Group Member means IPS and its Affiliates and their respective successors and assigns.

Issue Statements has the meaning specified in Section 11.13(a) .

Item means a Money Order.

Legal Requirements means all federal, state and local laws, regulations and judicial and administrative decisions and interpretations applicable to the Business.

Losses means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

Money Order means a paper payment instrument that is named and denominated as a money order and that is sold pursuant to an IPS Agreement to a purchaser for the purpose of the purchaser’s effecting a payment to a third party. The term “Money Order” also includes a paper payment instrument that is issued directly by IPS, provided that the issuance of such instrument falls within one of the product codes listed on Schedule 2.1 (B) . The term “Money Order” also includes refund checks issued by WU for IPS as further described on Schedule 2.1 (A) .

Notice of Default has the meaning specified in Section 9.3(b) .

Party ” means IPS or WU.

Patent License” has the meaning specified in Section 8.6 .

Person means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Body.

POS Equipment has the meaning specified in Section 7.4 .

Service Fees has the meaning specified in Section 2.2(a) .

 

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Senior Executives has the meaning specified in Section 11.13(a) .

Tax (and with correlative meaning, “ Taxes ”) means: (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp or environmental (including taxes under Code Section 59A) tax, or any other tax custom, duty or other like assessment or charge of any kind whatsoever, together with any interest or any penalty; and (ii) any liability for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation under any Tax sharing arrangement or Tax indemnity arrangement.

Term has the meaning specified in Section 9.1(b) .

Trade Secrets means confidential ideas, trade secrets, know-how, concepts, methods, processes, practices, formulae, reports, data, customer lists, mailing lists, business plans or other proprietary information.

Transaction Tax has the meaning specified in Section 8.1 .

User Manual has the meaning specified in Schedule 5.5 .

WU has the meaning specified in the Preamble. In addition, with respect to business conducted in Canada, the term “WU” shall include the Western Union Financial Services (Canada), Inc., an Ontario corporation, which is a wholly-owned subsidiary of Western Union Financial Services, Inc.

WU Agreement has the meaning specified in Section 7.3 .

WU Group Member means WU and its Affiliates and their respective successors and assigns.

WU Services has the meaning specified in Section 2.1(a) .

WU Statement has the meaning specified in Section 2.2 (b) .

WU Service Location means 12500 East Belford Avenue, Englewood, Colorado 80112, or as otherwise permitted in accordance with Section 2.6 .

1.2. Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:

(i) words used in the singular include the plural and words in the plural include the singular;

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;

 

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(iii) reference to any gender includes the other gender;

(iv) the word “including” means “including but not limited to” or “including without limitation”;

(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;

(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(viii) reference to any statute means such statute (including all rules and regulations promulgated thereunder) as amended from time to time and includes any successor legislation thereto;

(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(x) in the event of any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control; and

(xi) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement.

(b) This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against either Party shall not apply to any construction or interpretation hereof. Subject to Section 11.10 , this Agreement shall be interpreted and construed to the maximum extent possible so as to uphold the enforceability of each of the terms and provisions hereof, it being understood and acknowledged that this Agreement was entered into by the Parties after substantial negotiations and with full awareness by the Parties of the terms and provisions hereof and the consequences thereof.

 

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ARTICLE II

SERVICES

2.1. WU Services . (a) Subject to the terms and conditions stated herein, commencing on the Closing Date and continuing throughout the Term, WU shall provide (or cause one of its Affiliates to provide) the services set forth on Schedule 2.1(A ) (collectively, the “ WU Services ”), in accordance with the procedures and standards set forth on Schedule 2.1(A) and in the User Manuals, for each Money Order issued during the Term hereof.

(b) In the event that WU wishes to designate a WU Affiliate or a third party to perform any of the WU Services, WU shall be permitted to do so so long as the transferred WU Services are performed in compliance with this Agreement. WU shall remain responsible and liable for all WU Services provided hereunder, whether performed by WU, by a WU Affiliate or by a third party.

(c) Except as expressly provided herein, no interest whatsoever in any IPS Agreement is or will be transferred to WU under this Agreement. All payments to be made to IPS under the IPS Agreements, whether by IPS Clients or otherwise, shall continue to be for the account of IPS, and the only remuneration of, or financial benefit to WU with respect to the IPS Agreements shall be the fees for the WU Services as set forth on Schedule 2.2 .

(d) In performing the WU Services, WU may make no use of the names or trademarks of IPS or any of its Affiliates, except as is essential in order to perform the WU Services in accordance with Schedule 2.1(A) .

2.2. Payment for WU Services . In consideration for providing the WU Services to IPS, IPS shall pay WU the fees (the “ Service Fees ”) set forth on Schedule 2.2 .

2.3. Quality of WU Services . (a) WU shall provide the WU Services to IPS in accordance with the User Manuals, in substantially the same manner as WU performs such aspect for itself and in compliance with all Legal Requirements applicable to the Business and to WU as the provider of the WU Services.

(b) The data and information submitted by WU to IPS shall be accurate and complete, and WU shall be responsible for any errors in and with respect to the data and information submitted to IPS; provided , however , WU shall not be responsible for, and shall not be required to indemnify IPS with respect to, incomplete, inaccurate or erroneous data or information to the extent such inaccuracy, incompleteness or error results from any inaccuracy, incompleteness or error in the data received by WU from IPS. To the extent WU is responsible for the inaccuracy, incompleteness or error, WU shall promptly correct such errors or inaccuracies in the data or information prepared by WU and submitted to IPS, but such correction shall not limit WU’s indemnification obligations under Article X .

(c) WU shall provide access to the WU Service Locations to such auditors, internal and external, and inspectors as IPS or any regulatory authority may designate. Audits by regulatory authorities will occur on such occasions as the regulatory authority requires and with

 

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such notice as the regulatory authority permits. Such auditors and inspectors will be required to sign appropriate confidentiality agreements and will be escorted by WU personnel while performing any audits or inspections (to the extent permitted by the regulatory authority, in the case of audits required by regulatory authorities). All audits or inspections of the WU Service Locations and the WU Services that are required by IPS or by a regulatory authority having jurisdiction over IPS will be at the expense of IPS. WU shall provide such auditors and inspectors any assistance that they may reasonably require. IPS shall not be required to reimburse WU for the costs or time of the WU employees providing such assistance or related overhead. If any audit by an auditor designated by IPS or a regulatory authority having jurisdiction over IPS or WU results in WU being notified that it is not in compliance with any relevant and generally accepted accounting principle or other audit requirement relating to the WU Services, then:

(i) if the non-compliance was in existence prior to the date of this Agreement, WU will make such change at WU’s own expense; or

(ii) if the non-compliance arose after the date of this Agreement and the change is requested by IPS in order to comply with its auditors or regulators, WU shall make the change at IPS’ expense and any incremental recurring costs related to such change shall be at IPS’ expense; provided , however , that if WU would otherwise be required to make such change if it were the issuer of Money Orders hereunder, WU shall make the change at its own expense and WU shall bear any incremental recurring costs related to such change.

In the event of a dispute between WU and IPS relating to a notification of non-compliance received by WU from an auditor or regulatory authority, WU and IPS shall resolve such dispute in accordance with the procedures described in Section 11.13 .

2.4. WU Personnel . WU shall designate an individual who shall be responsible for implementing the WU Services (“ Account Manager ”).

2.5. Location of WU Services . The WU Services shall be performed by WU at the WU Service Locations. WU may change any WU Service Location to a location where WU performs the same services for a majority of money orders processed by WU (including, but not limited to, Items). If a location is to be changed, WU will provide IPS thirty (30) calendar days’ prior notice. If required by law or IPS’ regulators, WU must obtain IPS’ prior written consent to change any WU Service location, which consent will not be unreasonably withheld.

2.6. Safety and Security Standards . As part of the WU Services, WU shall maintain and enforce at the WU Service Locations such safety and security procedures as are required to meet the applicable regulatory standards. The safety and security procedures shall protect the data and information of IPS and its customers from unauthorized access. In the event WU suffers a data security breach with respect to any of IPS’ data, WU shall promptly notify IPS of such event.

 

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2.7. Effect of Non-Performance of Either Party . In the event that either Party fails to timely perform any task assigned to it pursuant to this Agreement, the other Party shall be excused from performing any subsequent task therein that is dependent upon, and cannot be performed in the ordinary course of the provision of the WU Services without, the performance of the non-performed task, until the non-performed task is performed, and the time period for performing such subsequent task shall commence only when the non-performed task is completed in accordance therewith. The excuse from performance provided in this Section 2.7 does not limit any remedy otherwise available to the Party so excused, including the right of the Party so excused to perform the non-performed task if practicable.

ARTICLE III

MANAGEMENT OF THE IPS CLIENTS

3.1 IPS Agreements . Certain provisions relating to IPS Agreements are set forth in Schedule 2.1 (A).

3.2 Limitations on WU’s Obligations . Certain limitations on WU’s obligations as manager of the Business are set forth in Schedule 2.1 (A) .

ARTICLE IV

CLOSING

The closing shall occur by mutual agreement of the Parties as evidenced by the execution of a certificate specifying the date of the closing (sometimes referred to herein as the “ Closing Date ”) by each of the Parties.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF IPS

As an inducement to WU to enter into this Agreement and to consummate the transactions contemplated hereby, IPS represents and warrants to WU and agrees as follows:

5.1. Organization of IPS . IPS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. IPS has full corporate power and authority to own, operate and use the assets used in connection with the Business and to carry on the Business as now conducted.

5.2. Authority of IPS . IPS has full corporate power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by IPS have been duly authorized and approved by IPS and do not require any further authorization or consent of IPS or its stockholder. This Agreement has been duly executed and delivered by IPS and is the legal, valid and binding obligation of IPS enforceable in accordance with its terms.

 

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5.3. Contract Schedule . The IPS Agreements referenced on the Contract Schedule are all of the agreements, contracts or understandings that have been entered into by IPS and are currently in force with sellers of Money Orders or pursuant to which Money Orders are sold.

5.4 Governmental Permits. IPS owns, holds or possesses all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a Governmental Body that are necessary to entitle it to own or lease, operate and use the assets used in connection with the Business and to carry on and conduct the Business substantially as currently conducted (collectively, the “ Governmental Permits ”), except for such Governmental Permits as to which the failure to so own, hold or possess would not have a material adverse effect on the Business.

5.5 Capacity . IPS has, and will maintain throughout the Term, the operational capacity and resources necessary to perform the services as set forth on Schedule 5.5 .

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF WU

As an inducement to IPS to enter into this Agreement and to consummate the transactions contemplated hereby, WU hereby represents and warrants to IPS and agrees as follows:

6.1. Organization of WU . WU is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. WU has full corporate power and authority to provide the WU Services and to own, operate and use its properties and assets and to carry on its business as now conducted.

6.2. Authority of WU . WU has full corporate power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by WU have been duly authorized and approved by WU and do not require any further authorization or consent of WU or its stockholder. This Agreement has been duly executed and delivered by WU and is the legal, valid and binding agreement of WU enforceable in accordance with its terms.

6.3. Capacity and Governmental Permits . WU has, and will maintain throughout the Term, the operational capacity and resources necessary to perform the WU Services in accordance with this Agreement. WU owns, holds or possesses all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from Governmental Bodies that are necessary for it to perform the WU Services in accordance with this Agreement.

 

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ARTICLE VII

CERTAIN CONTRACT AND TRANSITION RELATED PROVISIONS

7.1 Contract Provisions . Certain provisions relating to agreements with selling agents are set forth in Schedule 2.1 (A).

7.2 Termination of Certain IPS Contractual Provisions. Certain provisions relating to agreements with IPS Clients are set forth in Schedule 2.1 (A).

7.3 Transition Efforts . (a) If WU decides to issue WU branded money orders under its own licenses or to issue money orders under another third party’s licenses, IPS agrees that it will, in good faith, negotiate with WU a transition services agreement to provide WU with the types of services that IPS is providing under this Agreement as listed in Schedule 5.5 for a reasonable period of time in order to allow WU to make a smooth transition to the sale of such other money order service.

(b) After the third anniversary of the Closing Date, IPS shall have the right to require WU to agree to either (i) issue Money Orders under its own licenses (or make arrangements with another third party to issue Money Orders) and perform the obligations of the issuer of Money Orders under any IPS Agreements after the last day of the Initial Term; or (ii) cease entering into IPS Agreements that extend beyond the last day of the Initial Term.

7.4 Equipment. Point of Sale equipment, software and other equipment used in connection with the Business (collectively, all such items are referred to herein as “POS Equipment”) shall be maintained by WU. POS Equipment shall be provided to WU and the IPS Client in accordance with Schedule 7.4 .

7.5 Abandoned Property Software, Documentation and System. The abandoned property software, documentation and system utilized in the Business shall be provided to WU in accordance with Schedule 5.5 .

ARTICLE VIII

ADDITIONAL AGREEMENTS

8.1. Taxes . For purposes of this Section 8.1 , “Transaction Tax” shall mean any federal, state or local gross receipts, sales or use tax or other like assessment or charge. The recipient of any services rendered pursuant to this Agreement shall be responsible for any Transaction Taxes levied or imposed on the provision of such services.

8.2. Proprietary and Confidential Information . (a) Except as specifically provided in this Agreement, neither Party shall use or disclose to any third party any Confidential Information of the other Party; provided , however , that information shall not be regarded as

 

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Confidential Information if it (i) is or becomes generally available to the public other than as a result of a disclosure by one of the Parties or any of its Affiliates, as the case may be; (ii) is or becomes known or available to one of the Parties or its respective Affiliates, as the case may be, on a non-confidential basis from a source who, insofar as is known to such Party, is not prohibited from transmitting the information to such Party or its Affiliates by a contractual, legal or fiduciary obligation; or (iii) is or was developed by a Party or any of its Affiliates without the use of any Confidential Information from the other Party or any of its Affiliates. All Confidential Information shall be held in confidence by the Parties to the same extent and in at least the same manner as the Parties protect their own confidential or proprietary information.

(b) Each Party shall be permitted to disclose relevant aspects of the other Party’s Confidential Information to its officers, agents and employees and to the officers, agents and employees of its Affiliates to the extent that such disclosure is reasonably necessary for the performance of its duties and obligations under this Agreement; provided , that such Party shall take all reasonable measures to ensure that Confidential Information of the other Party is not disclosed or duplicated in contravention of this Agreement by such officers, agents and employees. In addition, WU may use IPS’ Confidential Information regarding IPS Clients for the purposes contemplated by Schedule 2.1 (A), Section 1 (b) ; provided, that such use is not in contravention of any agreement between IPS and the applicable IPS Client or such use is not prohibited by law.

(c) The obligations in this Section 8.2 shall not restrict any disclosure by either Party pursuant to any applicable law or by order of any court or government agency (provided that the disclosing Party shall give prompt notice to the non-disclosing Party of such order).

(d) As used in this Agreement, the term “ Confidential Information ” shall mean (i) with respect to IPS, all information, data and materials relating to the customers, business and affairs of IPS provided to, disclosed or received by WU from any source in connection with this Agreement or WU’s performance of the WU Services, including any Trade Secrets and the terms of any IPS Agreement, (ii) with respect to WU, all information, data and materials relating to the customers, business and affairs of WU provided to, disclosed or received by IPS from any source in connection with this Agreement, including any Trade Secrets and the terms of any WU Agreement and (iii) the terms of this Agreement.

(e) Notwithstanding the foregoing, WU shall be entitled to use Confidential Information of IPS after the termination of this Agreement to the extent use of such information is necessary in connection with its continuation of the Business after the termination of this Agreement.

8.3. Employees and Employee Benefit Plans . (a) Other than as WU may otherwise agree in its discretion by separate agreement in connection with its spin off from First Data Corp., no person who is or who has been an employee of IPS (an “ Employee ”) shall transfer employment to WU or any of its Affiliates in connection with WU’s provision of WU Services pursuant to this Agreement. Nothing contained in this Agreement shall obligate WU to employ any persons who are or who have been Employees. IPS shall retain the sole

 

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responsibility, in connection with the Employees’ employment by IPS and its Affiliates, for all matters relating to the maintenance of personnel and payroll records, the withholding and payment of federal, state and local income and payroll Taxes, the payment of workers’ compensation and unemployment compensation insurance, salaries, wages and pension, welfare and other fringe benefits, including any severance and/or pay-out of accrued vacation pay which may be triggered as a result of any termination of employment (including all severance and vacation pay liabilities incurred on or prior to the Closing Date) and the conduct of all other matters relating to labor relations, including compliance with IPS’ obligations under any applicable collective bargaining agreements and all negotiations and communications with any union. IPS shall retain liability for compliance with all applicable labor and employment laws relating to the Employees in connection with their employment by IPS or any of its Affiliates. IPS shall retain the obligation and liability for any workers’ compensation or similar workers’ protection claims with respect to any Employee in connection with the Employee’s employment by IPS or its Affiliates.

(b) IPS shall retain all liabilities under its employee benefits plans, programs, agreements and arrangements, in connection with each Employee’s employment by IPS and its Affiliates, including (a) any liabilities relating to any noncompliance with applicable laws, including COBRA, and (b) any liabilities which arise as a result of IPS’ joint and several liability through its relationship with an Affiliate. IPS shall be solely responsible to provide continuation coverage under COBRA and other any applicable law to any Employee or beneficiary of any Employee who is entitled to such continuation coverage in connection with the Employee’s employment by IPS and its Affiliates.

8.4. Insurance . During the Term, WU shall maintain the adequate and customary insurance coverages for the conduct of the Business. WU shall add IPS to the Commercial General Liability policy as an additional insured. WU shall provide IPS with a certificate of such coverage prior to the date of this Agreement. WU shall provide to IPS at least thirty (30) days prior written notice of any cancellation, modification or alteration affecting the coverage.

8.5. Independent Contractor Status . Nothing in this Agreement shall be deemed to create a partnership, joint venture or agency relationship between the Parties. WU shall render and perform the WU Services as an independent contractor in accordance with its own standards, subject to its compliance with the provisions of this Agreement and with all applicable laws, ordinances and regulations.

8.6. License to Use IPS Patent License. As further described in Schedule 2.1 (A) , IPS has granted WU a license to use an IPS patent license.

8.7. Legal Requirements . During the Term, (i) IPS agrees to conduct the Business in compliance with the Legal Requirements (but such agreement shall not limit WU’s obligation to perform the WU Services in accordance herewith), and (ii) WU agrees to perform the WU Services in compliance with all Legal Requirements applicable to the Business and to WU as the provider of the WU Services.

 

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ARTICLE IX

TERM AND TERMINATION

9.1. Term . (a) Subject to any early termination provided for in this Agreement, the term of the provision of WU Services under this Agreement begin on the effective date hereof and shall continue for a period of 5 years (the “ Initial Term ”).

(b) At any time after the first anniversary of the Closing Date, WU may request any extension of this Agreement for an additional term. If the parties are able to mutually agree to the terms of such extension (including without limitation, the length of the extension and pricing), the provision of WU Services under this Agreement may be extended for an additional term (the “ Additional Term ” and, together with the Initial Term, the “ Term ”).

(c) The provisions related to IPS’ payment for WU Services shall survive the termination of this Agreement and IPS shall continue to pay WU for the WU Services until all Money Orders have either been paid or escheated. In the event a Money Order is not subject to escheatment, the provisions related to IPS’ payment for WU Services with respect to such Money Order shall survive the termination of this Agreement and IPS shall continue to pay WU for the WU Services until such Money Order is either paid or, if not paid, until seven years after the date of issuance of such Money Order.

(d) If on the last day of the Initial Term, IPS continues to have obligations under the IPS Agreements that have not been assumed by WU, then IPS and WU agree to extend the term of this Agreement until all such obligations have been satisfied; provided, however, that during such extended Term, WU shall not be authorized to further extend the term of any IPS Agreement without the written consent of IPS.

9.2. Termination . The provision of WU Services under this Agreement may be terminated pursuant to Section 9.3 or at any time by the mutual written consent of WU and IPS.

9.3. Events of Default . (a) The occurrence of any of the following events (each, an “ Event of Default ”) shall constitute an Event of Default under this Agreement:

(i) Payment of Obligations under this Agreement . The failure by either Party to make any payment to the other when such payment is due and owing pursuant to the terms and conditions of this Agreement.

(ii) Failure to Perform . The failure of either Party to perform any material term, covenant, or agreement contained in this Agreement.

(iii) Breach of Representation or Warranty . Any representation or warranty of either Party made in this Agreement or in any document or instrument delivered pursuant to or in connection with this Agreement shall prove to have been false in any material respect upon the date when made.

 

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(iv) Insolvency, Bankruptcy, Etc .

(A) If either Party shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay or shall generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of such Party or of any substantial part of the assets of such Party or shall commence any case or other proceeding relating to such Party under any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or any such petition or application shall be filed or any such case or other proceeding shall be commenced against such Party and such Party shall indicate its approval thereof, consent thereto, or acquiescence therein.

(B) If a decree or order shall be entered appointing any such trustee, custodian, liquidator or receiver, or adjudicating either Party bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief shall be entered in respect of such Party in an involuntary case under Federal bankruptcy laws as now or hereafter in effect.

(b) If any Event of Default shall have occurred, the non-defaulting Party shall notify the defaulting Party in writing (the “ Notice of Default ”) of such Event of Default. If such Event of Default has not been cured or waived in writing within thirty (30) calendar days of the date of the Notice of Default, the non-defaulting Party may, in its discretion, immediately terminate the provision of WU Services under this Agreement; provided , however , that if the Event of Default is a payment default pursuant to Section 9.3(a)(i) , the period for curing such default shall be reduced to ten (10) calendar days. The foregoing right to terminate is not intended to be exclusive of any other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law.

9.4. Effect of Termination . Except as expressly provided herein, the termination of the provision of WU Services under this Agreement shall not affect any other provisions of this Agreement. Termination of the provision of WU Services under this Agreement shall not limit either Party’s obligations for breach of this Agreement prior to termination or for the payment of amounts due that were incurred prior to such termination.

ARTICLE X

INDEMNIFICATION AND LIMITATION ON LIABILITY

10.1. Indemnification by IPS . (a) IPS agrees to indemnify and hold harmless each WU Group Member from and against any and all Losses and Expenses incurred by such WU Group Member in connection with or arising from:

(i) any breach by IPS of any of its covenants in this Agreement;

 

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(ii) any failure of IPS to perform any of its obligations in this Agreement;

(iii) any breach of any warranty or the inaccuracy of any representation of IPS contained or referred to in this Agreement; or

(iv) the grossly negligent, intentionally wrongful or fraudulent acts of IPS or its employees, agents or representatives.

(b) Limitation on Indemnification by IPS . Subject to Section 10.4(b) , the indemnification by IPS provided for in Section 10.1(a) shall terminate one (1) year after the expiration of the Initial Term (and no claims shall be made by a WU Group Member thereafter); provided , however , indemnification by IPS shall continue as to:

(i) the covenants of IPS set forth in Sections 8.1 , 8.2 and 8.3 , as to all of which no time limitation shall apply;

(ii) any Losses or Expenses of which any WU Group Member has notified IPS in accordance with the requirements of Section 10.4 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 10.1(b) , as to which the obligation of IPS shall continue until the liability of IPS shall have been determined pursuant to this Article X , and IPS shall have reimbursed all WU Group Members for the full amount of such Losses and Expenses for which IPS is liable in accordance with this Article X ;

(iii) claims relating to or arising out of the WU Services provided in the Additional Term or during the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) ; provided , however , that the indemnification provided for in this subsection (iii)  shall terminate one (1) year after the expiration of the Additional Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) , as the case may be;

(iv) claims relating to or arising out of the failure of IPS to pay WU for the WU Services; and

(v) claims related to payment for WU Services as set forth in Section 9.1 .

IPS’ indemnification obligations provided for in this Agreement shall be further limited as follows:

(A) No Consequential Damages . In no event shall IPS or any of its Affiliates be liable for any consequential damages under or in connection with this Agreement, which are hereby excluded by agreement of the Parties regardless of whether IPS or any of its Affiliates has been advised, or could have foreseen, of the possibility of such damages; provided , however , that the foregoing exclusion shall not apply to (1) consequential damages incurred by any WU Group Member as a result of the violation by IPS of the covenants in Section 8.2 , or (2) in the case of consequential damages recovered from a WU Group Member by a third party. The foregoing represents an express allocation of risk between the Parties.

 

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(B) Notwithstanding anything in this Agreement to the contrary, IPS shall in no event be liable or responsible for its failure to carry out any of its obligations under this Agreement, if and to the extent such failure is caused by Force Majeure. If performance by IPS is delayed by more than thirty (30) days by Force Majeure, WU may terminate this Agreement by notice to IPS which termination right, if exercised by WU, shall be WU’s sole remedy for IPS’ failure to provide IPS Services by reason of any Force Majeure. Notwithstanding anything in this paragraph, nothing shall limit any claims by WU unrelated to the Force Majeure event.

(C) Disclaimer of Warranties . Except as expressly set forth in this Agreement, IPS does not make any representation or warranty whatsoever, express or implied, including, but not limited to, any representation or warranty as to IPS Services (including with respect to the nature, quantity or quality thereof) to be provided hereunder.

(D) Notwithstanding anything contained in this Agreement to the contrary, IPS’ aggregate liability for indemnification pursuant to this Section 10.1 shall in no event exceed $5 million.

10.2. Indemnification by WU . (a) WU agrees to indemnify and hold harmless each IPS Group Member from and against any and all Losses and Expenses incurred by such IPS Group Member in connection with or arising from:

(i) any breach by WU of any of its covenants or agreements in this Agreement;

(ii) any failure by WU to perform any of its obligations in this Agreement including its obligations to perform the WU Services in accordance with Schedule 2.1(A) ;

(iii) any breach of any warranty or the inaccuracy of any representation of WU contained or referred to in this Agreement;

(iv) the grossly negligent, intentionally wrongful or fraudulent acts of WU or its employees, agents or representatives;

(v) any Counterfeit Item that is presented to IPS for payment during the Term with respect to which action was required to be taken by WU pursuant to Schedule 2.1(A) and WU failed to take such action; or

(vi) any acts of IPS Clients.

 

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(b) Limitation on Indemnification by WU . Subject to Section 10.4(b) , the indemnification by WU provided for in Section 10.2(a) shall terminate one (1) year after the expiration of the Initial Term (and no claims shall be made by an IPS Group Member thereafter), provided , however , indemnification by WU shall continue as to:

(i) the covenants of WU set forth in Sections 8.1 , 8.2 , and 8.3 , as to all of which no time limitation shall apply;

(ii) any Losses or Expenses of which IPS has notified WU in accordance with the requirements of Section 10.4 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 10.2(b) , as to which the obligation of WU shall continue until the liability of WU shall have been determined pursuant to this Article X , and WU shall have reimbursed all IPS Group Members for the full amount of such Losses and Expenses for which WU is liable in accordance with this Article X ; and

(iii) claims relating to or arising out of the WU Services provided in the Additional Term or during the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) ; provided , however , that the indemnification provided for in this subsection (iii)  shall terminate one (1) year after the expiration of the Additional Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (d ), as the case may be.

WU’s indemnification obligations provided for in this Agreement shall be further limited as follows:

(A) Notwithstanding anything in this Agreement to the contrary, WU shall in no event be liable or responsible for its failure to carry out any of its obligations under this Agreement, if and to the extent such failure is caused by Force Majeure. If performance by WU is delayed by more than thirty (30) days by Force Majeure, IPS may terminate this Agreement by notice to WU, which termination right, if exercised by IPS, shall be IPS’ sole remedy for WU’s failure to provide WU Services by reason of any Force Majeure. Notwithstanding anything in this paragraph, nothing shall limit any claims by IPS unrelated to the Force Majeure event.

(B) Disclaimer of Warranties . Except as expressly set forth in this Agreement, WU does not make any representation or warranty whatsoever, express or implied, including, but not limited to, any representation or warranty as to WU Services (including with respect to the nature, quantity or quality thereof) to be provided hereunder.

(C) No Consequential Damages . In no event shall WU or any of its Affiliates be liable for any consequential damages under or in connection with this Agreement, which are hereby excluded by agreement of the Parties regardless of whether WU or any of its Affiliates has been advised, or could have foreseen, of the possibility of such damages; provided , however , that the foregoing

 

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exclusion shall not apply (1) to consequential damages incurred by any IPS Group Member as a result of violations by WU of the covenants in Section 8.2 , or (2) in the case of consequential damages recovered from an IPS Group Member by a third party. The foregoing represents an express allocation of risk between the Parties.

(D) Counterfeit Items . In the case of any Counterfeit Item which is presented to IPS for payment during the Term with respect to which either no action was required to be taken by WU pursuant to Schedule 2.1(A) or all action that was required to be taken by WU pursuant to S chedule 2.1(A) was taken, WU will have no obligation to indemnify and hold harmless each IPS Group Member and any and all Losses and Expenses incurred in connection with or arising from such Counterfeit Item shall be the sole responsibility of IPS.

(E) Notwithstanding anything contained in this Agreement to the contrary and except for the indemnification obligations of WU set forth in Section 10.2(a)(v) , WU’s annual aggregate liability for indemnification pursuant to this Section 10.2 shall in no event exceed $5 million, provided , however , that such limit shall not apply to:

(i) Losses and Expenses related to a failure of either WU or an IPS Client to remit proceeds from the sale of Money Orders to IPS .

(ii) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a Counterfeit Item when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set in the User Manuals;

(iii) Losses and Expenses caused by WU’s failure to instruct IPS to return (including all such failures caused by IPS’s failure to enter stop payment orders in accordance with User Manuals), by the applicable deadline specified in the User Manuals, an Item on which a stop payment has been requested in accordance the procedure set forth in the User Manuals, when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth in the User Manuals;

(iv) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a payment instrument that does not bear a serial number assigned to an IPS Client or does bear a serial number assigned to an IPS Client but its face amount does not correspond to the issue amount reported by the IPS Client when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth on in the User Manuals; or

(v) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a

 

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payment instrument or Item that bears the same valid serial number and face amount as an Item (or Counterfeit Item) previously paid when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth in the User Manuals .

(vi) Regulatory fines, assessment and penalties arising from WU’s non-compliance with the terms and conditions of this Agreement.

For purposes of subparagraphs (i) through (iv) above, the terms “Losses and Expenses” shall not include losses or expenses incurred by IPS that are related to adjustments to the average investable balance of an IPS Client that will be required when the items described above are properly recorded or adjusted as the case may be.

(c) In the event that IPS makes a claim against WU for indemnification under this Agreement, IPS shall assist and cooperate fully with WU, in all such lawful manners as WU shall request, in asserting in the name of WU any claims or rights against any third party or any defenses to claims asserted by third parties that IPS may have, or have the right to assert, including, without limitation, any rights under any agreement with IPS’ depository banks, the IPS Clients or other third party, by law or in equity. Such assistance and cooperation shall include, but not be limited to, the assignment of claims, rights or defenses held by IPS, but excludes the right to assert or defend any action in the name of IPS. As part of such assistance, IPS will make available IPS employees knowledgeable with respect to such claim or defense. WU shall bear any material costs and expenses incurred by IPS to third parties, such as IPS’ out-of-pocket costs and outside attorneys’ fees, in providing such assistance and cooperation, but WU shall not be required to reimburse IPS for the costs or time of IPS employees or related overhead. Upon reasonable request, WU shall provide IPS with non-confidential information regarding the status of any such actions.

(d) In the event that WU is required by law, regulation or court order to bring a formal legal action against an IPS Client, an IPS depository bank or other third party, under IPS’ name (whether as a claimant or co-claimant), then WU and IPS shall utilize the following procedures:

(A) WU will notify IPS of its intent to bring a formal legal action against the third party, and will include in such notification a copy of the law, regulation, court order or written opinion of outside counsel on letterhead, demonstrating that IPS is a necessary party to the legal proceedings contemplated.

(B) IPS shall determine within ten (10) Business Days of the receipt of the notice and documentation whether it will permit WU to proceed in IPS’ name. If IPS will permit WU to proceed in IPS’ name, WU shall proceed with the proposed formal legal action and/or any other action WU has the right to pursue pursuant to Section 10.2(c) . If IPS will not permit WU to proceed in IPS’ name, (1) IPS shall promptly reimburse WU for the amount of the claim that is attributable to the actions or failures of the third party (and that WU has previously paid to IPS), and (2) IPS shall have no further right to seek

 

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indemnification from WU for such that portion of such claim under this Agreement. In the event IPS and WU do not agree as to the amount of the claim attributable to the actions or failures of the third party, such dispute will be resolved in accordance with Section 11.13 .

(C) In the event any formal proceedings are commenced hereunder under IPS’ name, WU will update IPS regularly on the status of such proceedings and provide information as reasonably requested by IPS regarding such proceedings.

10.3. Specific Performance . (a) I n the event IPS or any of its Affiliates violates any of its obligations under Section 8.2 , WU may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. IPS acknowledges that a violation of Section 8.2 may cause WU irreparable harm which may not be adequately compensated for by money damages. IPS therefore agrees that in the event of any actual or threatened violation of Section 8.2 , WU shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against IPS or such Affiliate of IPS to prevent any violations of Section 8.2 , without the necessity of posting a bond.

(b) In the event WU or any of its Affiliates violates any of its obligations under Section 8.2 , IPS may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. WU acknowledges that a violation of Section 8.2 may cause IPS irreparable harm which may not be adequately compensated for by money damages. WU therefore agrees that in the event of any actual or threatened violation of Section 8.2 , IPS shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against WU or such Affiliate of WU to prevent any violations of Section 8.2 , without the necessity of posting a bond.

(c) The prevailing Party in any action commenced under this Section 10.3 shall also be entitled to receive reasonable attorneys’ fees and court costs.

10.4. Notice of Claims .

(a) General Procedures . The following procedures shall apply to any claim for indemnification under this Agreement:

(i) Any Person (the “ Indemnified Party ”) seeking indemnification hereunder shall give to the Party obligated to provide indemnification to such Indemnified Party (the “ Indemnifying Party ”) 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 , 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

 

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given promptly after the action or suit is commenced; provided further that failure to give such notice shall not relieve the Indemnifying Party of its obligations hereunder except to the extent it shall have been prejudiced by such failure.

(ii) In calculating any Losses or Expenses (i) there shall be deducted (x) any insurance recovery in respect thereof (and no right of subrogation shall accrue hereunder to any insurer) and (y) the amount of any Tax benefit to the Indemnified Party (or any of its Affiliates) with respect to such Losses or Expenses (after giving effect to the tax effect of receipt of the indemnification payments), and (ii) there shall be added the amount of any Tax detriment to the Indemnified Party (or any of its Affiliates) with respect to such Losses or Expenses (after giving effect to the tax effect of receipt of the indemnification payments).

(iii) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article X shall be determined (i) by the written agreement between the Indemnified Party and the Indemnifying Party; (ii) pursuant to Section 11.13 ; or (iii) by any other means to which the Indemnified Party and the Indemnifying Party 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.

(b) Limitation on Notice Period Relating to WU Services . No cause of action, dispute or claim for indemnification relating to the WU Services may be asserted or made against any Party on a date later than: (i) two (2) years after the date in which facts giving rise to such cause of action, dispute or claim are discovered or, with the exercise of due diligence, should reasonably have been discovered, or if such event for which indemnification is claimed is an action or proceeding brought against the Indemnified Party, the end of the related notification period provided in Section 10.4(a) or (ii) one year after the earlier of the termination of the provision of WU Services under this Agreement or the expiration of the Additional Term.

10.5. Third Person Claims . The following procedures shall apply to any claim for indemnification under this Agreement:

(a) Subject to Section 10.5(b) , the Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any third Person claim, action or suit against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnifying Party hereunder, and in any such case the Indemnifying Party 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 Indemnifying Party 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 Indemnifying

 

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Party (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 Indemnifying Party shall fail, within fourteen (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 Indemnifying Party 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 without such consent, provided that in such event the Indemnified Party shall waive any right to indemnity therefor hereunder unless such consent is unreasonably withheld.

(b) If any third Person claim, action or suit against any Indemnified Party is solely for money damages, then the Indemnifying Party shall have the right to conduct and control, through counsel of its choosing, 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 Indemnifying Party hereunder if the Indemnifying Party has acknowledged and agreed in writing that, if the same is adversely determined, the Indemnifying Party has an obligation to provide indemnification to the Indemnified Party in respect thereof, and in any such case the Indemnified Party 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 Indemnifying Party in connection therewith; provided , that the Indemnified Party 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 Indemnifying Party has so elected to conduct and control the defense thereof. 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 unless the Indemnified Party shall have sought the consent of the Indemnifying Party to such payment, settlement or compromise and such consent was unreasonably withheld, in which event no claim for indemnity therefor hereunder shall be waived.

ARTICLE XI

GENERAL PROVISIONS

11.1. Survival of Obligations . All representations, warranties, covenants and obligations contained in this Agreement shall survive the consummation of the transactions contemplated by this Agreement.

11.2. No Public Announcement . Neither WU nor IPS 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 the rules of any stock exchange, in which case the other Party shall be advised and the Parties shall use their best 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.

 

24


11.3. Notices . All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile, when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third Business Day after mailing, or (iv) if sent by reputable overnight courier services, when received, and shall be addressed as follows:

If to WU, to:

Western Union Financial Services, Inc.

12510 East Belford Avenue

Englewood, Colorado 80112

Telephone: (720) 332-3190

Facsimile: (720) 332-0501

Attention: General Manager- Retail Money Order

with a copy to:

General Counsel

If to IPS, to:

Integrated Payment Systems Inc.

12500 East Belford Avenue, Mail Stop M18U

Englewood, Colorado 80112

Telephone: (720) 332-3101

Facsimile: (720) 332-0096

Attention: President

with a copy to:

General Counsel

or to such other address as such Party may indicate by a notice delivered to the other Party.

11.4. Successors and Assigns; Third Party Beneficiaries . (a) The rights and obligations of either Party under this Agreement shall not be assigned by such Party without the written consent of the other Party.

(b) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Except for Article X , which is intended to benefit, and to be enforceable by, the parties specified therein, nothing in this

 

25


Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the Parties and their respective successors and assigns permitted by this Section 11.4 any right, remedy or claim under or by reason of this Agreement.

11.5. Access to Records after Closing Date . For a period of eight (8) years after the expiration or termination of the Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (c)  or Section 9.1(d) , as applicable, each Party and its representatives shall have reasonable access to all of the books and records related to this Agreement to the extent necessary for such Party to meet its regulatory and contractual responsibilities. Such access shall be afforded to such Party and its Affiliates upon receipt of reasonable advance notice and during normal business hours. The requesting Party shall be solely responsible for any costs and expenses incurred by it pursuant to this Section 11.5 in seeking access to books and records in the control of the other Party. The non-requesting Party shall be solely responsible for any costs and expenses incurred by it in complying with this Section 11.5 . If either Party or any of its Affiliates shall desire to dispose of any of such books and records prior to the expiration of such eight-year period, such Party shall, prior to such disposition, give the other Party a reasonable opportunity, at the non-disposing Party’s expense, to segregate and remove such books and records as the non-disposing Party may select.

11.6. Entire Agreement; Amendments . This Agreement and the Exhibits and Schedules referred to herein and the documents delivered pursuant hereto contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or letters of intent between the Parties. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties.

11.7. Interpretation . Article titles and headings to Sections 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.

11.8. 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 only if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party 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.

11.9. Expenses . Each Party 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.

 

26


11.10. Severability . Wherever possible, each provision of this Agreement 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 provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

11.11. Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be considered an original instrument, but all of which together shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed and delivered to each of the Parties.

11.12. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws (without regard to the conflicts of law provisions) of the State of New York.

11.13. Dispute Resolution . IPS and WU agree to utilize the following procedures to resolve any disputes between them that arise under this Agreement (other than those governed by Section 10.2(d) ):

(a) Level One . If IPS identifies an issue, or issues, that requires resolution, it will give the Account Manager written notice thereof; and if WU identifies an issue, or issues, that require resolution, it will give IPS written notice thereof. The Account Manager and an IPS designee will then negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously as feasible. If they are unable to resolve the issue(s) within ten (10) Business Days of such notice, either may state in writing to the other that they will not be able to resolve the remaining issue(s) through continued negotiation. Promptly thereafter, they will refer the issue(s) to the IPS executive with management responsibility for the WU relationship and the executive of WU with management responsibility for the IPS relationship (collectively, the “ Senior Executives” ) and will each provide to the Senior Executives a written statement describing in detail their respective positions related to the issue(s) (the “ Issue Statements” ).

(b) Level Two . Promptly after receiving the Issue Statements, the Senior Executives will negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously as feasible. If the Senior Executives are unable to resolve the issue(s) within ten (10) Business Days of receipt of such Issue Statements, either Senior Executive may state in writing to the other that they will not be able to resolve the remaining issue(s) through continued negotiation. Promptly thereafter, each Senior Executive will refer the issue(s) to a senior level executive from a separate business unit, division, subsidiary or Affiliate of their respective Party (the “ Distant Executive ”) and each Party’s respective management team will prepare any revisions to their respective Issue Statements. The Issue Statements, as revised, will be submitted to the Distant Executives.

(c) Level Three . Promptly after receiving the Issue Statements, the Distant Executives will negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously

 

27


as feasible. Thereafter, the Distant Executives will submit a joint written recommendation for any issue(s) the Distant Executives agreed upon and separate written recommendations for any issue(s) the Distant Executives disagreed upon or which remain unresolved. IPS and WU agree to be bound by such joint written recommendation. In the event, the Distant Executives are unable to resolve the dispute, then, at the request of either Party, the dispute shall be settled by binding arbitration by a single arbitrator. Such arbitration shall occur in Denver, Colorado, and shall be administered by the American Arbitration Association under its Commercial Arbitration Rules. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(d) Continuity of WU Services . WU acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of IPS. Accordingly, in the event of a dispute between IPS and WU, WU shall continue to so perform its obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with the provisions hereof.

IN WITNESS WHEREOF , the Parties have caused this Agreement to be executed the day and year first above written.

 

INTEGRATED PAYMENT SYSTEMS INC.
By:  

/s/ Rodney J. Esch

Name:   Rodney J. Esch
Title:   President
WESTERN UNION FINANCIAL SERVICES, INC.
By:  

/s/ Royal Cole

Name:   Royal Cole
Title:   Executive Vice President - Payment Services

 

28


[Schedules Intentionally Omitted]

 

29

Exhibit 10.6

 


EXECUTION COPY

$1,500,000,000

CREDIT AGREEMENT

among

THE WESTERN UNION COMPANY,

as the Company,

THE BANKS, ISSUING LENDERS AND SWING LINE BANK PARTIES HERETO,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent

and

BARCLAYS BANK PLC

JPMORGAN CHASE BANK, N.A.

MORGAN STANLEY BANK

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Documentation Agents

and

CITIBANK, N.A.,

as Administrative Agent

Dated as of September 27, 2006

CITIGROUP GLOBAL MARKETS INC.

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Joint Lead Arrangers and Joint Book Runners

 



TABLE OF CONTENTS

 

SECTION 1 DEFINITIONS

   1

1.1

   Defined Terms    1

1.2

   Other Definitional Provisions    18

1.3

   Accounting Terms    18

1.4

   Exchange Rates; Currency Equivalents    18

1.5

   Computation of Dollar Amounts    19
SECTION 2 AMOUNT AND TERMS OF COMMITMENTS    19

2.1

   Commitments    19

2.2

   Revolving Credit Notes    19

2.3

   Procedure for Borrowing    20

2.4

   Fees    21

2.5

   Termination or Reduction of Commitments    22

2.6

   Prepayments    22

2.7

   Conversion and Continuation Options    22

2.8

   Minimum Amounts of Tranches    23

2.9

   Interest Rates and Payment Dates    24

2.10

   Computation of Interest and Fees    24

2.11

   Inability to Determine Interest Rate    24

2.12

   Pro Rata Treatment and Payments    25

2.13

   Illegality    28

2.14

   Requirements of Law    28

2.15

   Taxes    30

2.16

   Indemnity    31

2.17

   Action of Affected Banks    31

2.18

   Bid Loans    32

2.19

   Swing Line Commitments    35

2.20

   Increase of Commitments    38

2.21

   Payment in Full at Maturity    38

2.22

   Letter of Credit Subfacility    38

2.23

   Indemnification; Nature of Issuing Lender’s Duties    42

2.24

   Defaulting Banks    44
SECTION 3 REPRESENTATIONS AND WARRANTIES    45

3.1

   Financial Condition    45

3.2

   No Change    46

3.3

   Corporate Existence; Compliance with Law    46

3.4

   Corporate Power; Authorization; Enforceable Obligations    46

3.5

   No Legal Bar    46

3.6

   No Material Litigation    47

3.7

   No Default    47

3.8

   Taxes    47

3.9

   Federal Regulations    47

3.10

   ERISA    47

3.11

   Investment Company Act    48

3.12

   Purpose of Loans    48

 

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3.13

   Disclosure    48

3.14

   Ranking    48

3.15

   Compliance with OFAC, FCPA    48

3.16

   Closing Date Representations and Warranties    48
SECTION 4 CONDITIONS PRECEDENT    49

4.1

   Conditions to Effectiveness    49

4.2

   Conditions to Each Loan    50
SECTION 5 AFFIRMATIVE COVENANTS    51

5.1

   Financial Statements    51

5.2

   Certificates; Other Information    52

5.3

   Conduct of Business and Maintenance of Existence    52

5.4

   Inspection of Property; Books, Records and Discussions    52

5.5

   Notices    53

5.6

   Covenant to Deliver Guaranty    53
SECTION 6 NEGATIVE COVENANTS    54

6.1

   Limitation on Significant Subsidiary Indebtedness    54

6.2

   Limitation on Liens    55

6.3

   Limitation on Sales and Leasebacks    57

6.4

   Limitations on Fundamental Changes    57

6.5

   Limitations on Restrictions on Dividends    57

6.6

   Financial Covenant    57
SECTION 7 EVENTS OF DEFAULT    58
SECTION 8 THE ADMINISTRATIVE AGENT    60

8.1

   Appointment    60

8.2

   Delegation of Duties    61

8.3

   Exculpatory Provisions    61

8.4

   Reliance by Administrative Agent    61

8.5

   Notice of Default    62

8.6

   Non-Reliance on Administrative Agent and Other Banks    62

8.7

   Indemnification    63

8.8

   Administrative Agent in Its Individual Capacity    63

8.9

   Successor Administrative Agent    63

8.10

   Syndication Agent, etc.    64
SECTION 9 MISCELLANEOUS    64

9.1

   Amendments and Waivers    64

9.2

   Notices    65

9.3

   No Waiver; Cumulative Remedies    67

9.4

   Survival of Representations and Warranties    67

9.5

   Payment of Expenses and Taxes    67

9.6

   Successors and Assigns; Participations; Purchasing Banks    68

9.7

   Adjustments; Set-off    71

9.8

   Table of Contents and Section Headings    72

9.9

   Confidentiality    72

9.10

   Patriot Act Notice    73

9.11

   Counterparts    73

9.12

   Severability    73

 

ii


9.13

   Integration    73

9.14

   GOVERNING LAW    73

9.15

   Submission To Jurisdiction; Waivers    73

9.16

   Acknowledgements    74

9.17

   WAIVERS OF JURY TRIAL    74

9.18

   Effectiveness    74

9.19

   Judgment Currency    75

 

iii


Schedules   
Schedule 1.1    Banks and Commitments
Schedule 3.6    Material Litigation
Exhibits   
Exhibit A    Revolving Credit Note
Exhibit B    Borrowing Certificate
Exhibit C    Opinion of Counsel
Exhibit D    Commitment Transfer Supplement
Exhibit E    Bid Note
Exhibit F    Bid Quote
Exhibit G    Bid Loan Confirmation
Exhibit H    Bid Loan Request
Exhibit I    Form of Swing Line Note
Exhibit J    Form of Commitment Increase Supplement


CREDIT AGREEMENT , dated as of September 27, 2006, among THE WESTERN UNION COMPANY , a Delaware corporation (the “ Company ”), the several banks and other financial institutions from time to time parties to this Agreement (the “ Banks ”), CITIBANK, N.A. , in its capacity as the Swing Line Bank (in such capacity, together with its successors in such capacity, the “ Swing Line Bank ”), CITIBANK, N.A. AND WELLS FARGO BANK, NATIONAL ASSOCIATION, in their capacity as Issuing Lenders (in such capacity, together with their successors in such capacity, the “ Issuing Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION , as syndication agent (in such capacity, the “ Syndication Agent ”), BARCLAYS BANK PLC , JPMORGAN CHASE BANK, N.A. , MORGAN STANLEY BANK and WACHOVIA BANK, NATIONAL ASSOCIATION , as Documentation Agents, and CITIBANK, N.A. , as administrative agent for the Banks hereunder (in such capacity, the “ Administrative Agent ”).

WITNESSETH:

WHEREAS , the Company has requested the Banks to make Loans and issue Letters of Credit to the Company, and the Banks are willing to make Loans and issue Letters of Credit to the Company, subject to the terms and conditions hereof;

NOW, THEREFORE , in consideration of the premises, and of the mutual covenants and agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

ABR ”: for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: “ Prime Rate ” shall mean, at any time, the rate of interest per annum publicly announced from time to time by Citibank at its principal office in New York, New York as its base rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Citibank as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms above, the ABR shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer


exist. Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change.

ABR Loans ”: Loans the rate of interest applicable to which is based upon the ABR.

Affiliate ”: as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons per forming similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

Agreement ”: this Credit Agreement, as amended, supplemented or otherwise modified from time to time.

Applicable Margin ”: with respect to each day for each Type of Loan and for the Letter of Credit Fee, the rate per annum based on the Ratings in effect on such day, as set forth under the relevant column heading below:

 

Rating

   Eurodollar
Loans and
Letter of
Credit Fee
 

Rating I

   0.150 %

Rating II

   0.190 %

Rating III

   0.270 %

Rating IV

   0.350 %

Rating V

   0.525 %

Applicable Time ”: with respect to any borrowings and payments in Foreign Currencies, the local times in the place of settlement for such Foreign Currencies as may be determined by the Administrative Agent to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.

Available Commitment ”: as to any Bank at any time, an amount equal to the excess, if any, of (a) the amount of such Bank’s Commitment over (b) the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of all Loans made by such Bank then outstanding plus the Bank’s Commitment Percentage of outstanding Swing Line Loans and LOC Obligations at such time.

Bankruptcy Code ”: the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

Bid Loan ”: each advance made to the Company pursuant to subsection 2.18.

 

2


Bid Loan Confirmation ”: a bid loan confirmation, substantially in the form of Exhibit G, to be delivered by the Company to the Administrative Agent in accordance with subsection 2.18(b)(iv).

Bid Loan Request ”: a bid loan request, substantially in the form of Exhibit H, to be delivered by the Company to the Administrative Agent in accordance with subsection 2.18(b)(i) in writing, by facsimile transmission, or by telephone immediately confirmed by facsimile transmission.

Bid Note ”: as defined in subsection 2.18.

Bid Quote ”: a bid quote substantially in the form of Exhibit F, to be delivered by a Bank to the Administrative Agent in accordance with subsection 2.18(b) in writing, by facsimile transmission, or by telephone immediately confirmed by facsimile transmission.

Borrowing Certificate ”: a notice of borrowing and certificate of the Company substantially in the form of Exhibit B.

Borrowing Date ”: any Business Day specified in a notice furnished pursuant to subsection 2.3, 2.18 or 2.19 as a date on which the Company requests the Banks or the Swing Line Bank, as the case may be, to make Loans hereunder.

Business Day ”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided, however, that (a) when used to describe the date of any borrowing of, or any payment or interest rate determination in respect of, a Eurodollar Loan, the term “Business Day” shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market and (b) when used in connection with a Foreign Currency Loan, the term “Business Day” shall also exclude any day on which banks are not open for foreign exchange dealings between banks in the exchange of the home country of such Foreign Currency (or, in the case of a Foreign Currency Loan denominated in Euro, on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open).

Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing.

Change of Control ”: any acquisition by any Person or Group of Persons, either directly or indirectly, of (a) the power to elect, appoint or cause the election or appointment of at least a majority of the members of the Board of Directors of the Company (or any other Person to which all or substantially all of the properties and assets of the Company have been transferred), through beneficial ownership of the Capital Stock of the Company (or such other Person) or through contract, agreement, arrangement or proxy, or (b) all or substantially all of the properties and assets of the Company.

Citibank ”: Citibank, N.A., together with its successors and/or assigns.

 

3


Closing Date ”: the date on which this Agreement becomes effective in accordance with subsection 4.1.

Code ”: the Internal Revenue Code of 1986, as amended from time to time.

Commitment ”: as to any Bank, the obligation of such Bank (a) to make Revolving Credit Loans to the Company hereunder, (b) to participate in Swing Line Loans made to the Company hereunder and (c) to purchase participation interests in the Letters of Credit, in an aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) at any one time outstanding not to exceed the amount set forth opposite such Bank’s name on Schedule 1.1 or in the Commitment Transfer Supplement pursuant to which it became a Bank, as such amount may be reduced pursuant to subsection 2.5 or subsection 9.6 or increased pursuant to subsection 2.20 or subsection 9.6.

Commitment Percentage ”: as to any Bank at any time, the percentage of the aggregate Commitments then constituted by such Bank’s Commitment.

Commitment Period ”: the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall terminate as provided herein.

Committed Swing Line Loan ”: as defined in subsection 2.19(a).

Commonly Controlled Entity ”: an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414 of the Code.

Competitor ”: any Person significantly and directly engaged in the business of payment instruments or consumer funds transfers.

Consolidated Net Assets ”: the gross book value of the assets of the Company and its Subsidiaries (which under GAAP would appear on the consolidated balance sheet of the Company and its Subsidiaries) less all reserves (including, without limitation, depreciation, depletion and amortization) applicable thereto and less (i) minority interests and (ii) liabilities (determined in accordance with GAAP) which, in accordance with their terms, will be settled within one year after the date of determination.

Consolidated Net Income ”: the net income of the Company and its Subsidiaries (which under GAAP would appear on the consolidated income statement of the Company and its Subsidiaries), excluding, however, (i) any equity of the Company or a Subsidiary in the unremitted earnings of any corporation which is not a Subsidiary, (ii) gains from the write-up in the book value of any asset and (iii) in the case of an acquisition of any Person which is accounted for on a purchase basis, earnings of such Person prior to its becoming a Subsidiary.

Consolidated Net Worth ”: the sum of (i) the par value (or value stated on the books of such corporation) of the capital stock of all classes of the Company and its Subsidiaries, plus (or minus in the case of a deficit) (ii) the amount of the consolidated surplus, whether capital or

 

4


earned, of the Company and its Subsidiaries, and plus (or minus in the case of a deficit) (iii) retained earnings of the Company and its Subsidiaries, all as determined in accordance with GAAP; provided, however, that Consolidated Net Worth shall exclude the effects of currency translation adjustments and the application of FAS 115.

Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Default ”: any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

Defaulted Amount ”: with respect to any Bank at any time, any amount required to be paid by such Bank to the Administrative Agent or any other Bank hereunder at or prior to such time that has not been so paid as of such time. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.24(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder on the same date as the Defaulted Amount so deemed paid in part.

Defaulting Bank ”: at any time, a Bank that, at such time, owes a Defaulted Loan or a Defaulted Amount.

Defaulted Loan ”: with respect to any Bank at any time, the portion of any Loan required to be made by such Bank to the Company pursuant to Section 2.1, 2.18, 2.19 or 2.22(e) at or prior to such time that has not been made by such Bank. In the event that a portion of a Defaulted Loan shall be deemed paid pursuant to Section 2.12(c), the remaining portion of such Defaulted Loan shall be considered a Defaulted Loan originally required to be paid hereunder on the same date as the Defaulted Loan so deemed paid in part.

Dollar Amount ”: at any time, (a) with respect to Dollars or an amount denominated in Dollars, such amount and (b) with respect to an amount of any Foreign Currency or an amount denominated in such Foreign Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) applicable to such Foreign Currency.

Dollars ” and “ $ ”: dollars in lawful currency of the United States of America.

Domestic Dollar Loans ”: the collective reference to Fixed Rate Bid Loans and ABR Loans.

EBITDA” : for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) any other non-cash deductions, losses or charges made in determining net income for such period (f) extraordinary losses or charges and (g) one-time transaction fees and expenses incurred in connection with the spin-off of the Company from First Data Corporation, or the issuance of (or refinancing of) Indebtedness incurred in connection with such spin-off, and minus extraordinary gains, in each case determined in accordance with GAAP for such period.

 

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EMU ”: Economic and Monetary Union as contemplated in the Treaty on European Union.

EMU Legislation ”: legislative measures of the European Council (including without limitation European Council regulations) for the introduction of, changeover to or operation of a single or unified European currency (whether known as the Euro or otherwise), being in part the implementation of the third stage of EMU.

Environmental Laws ”: any and all Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any Governmental Authority regulating, relating to or imposing liability or standards of conduct concerning environmental protection matters.

ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

Euro ” shall mean the single currency of Participating Member States of the European Union.

Eurodollar Loans ”: Loans the rate of interest applicable to which is based on the Eurodollar Rate.

Eurodollar Rate ”: a rate per annum determined by the Administrative Agent pursuant to the following formula:

 

  Eurodollar Rate =    LIBOR   
     1.00 - Eurodollar Reserve Percentage   

Eurodollar Reserve Percentage ”: for any day, (A) for any Eurodollar Loan with respect to which the Mandatory Cost Rate does not apply, the maximum rate (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) at which any bank subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against Eurocurrency Liabilities (as that term is used in Regulation D), if such liabilities were outstanding and (B) for any Eurodollar Loan with respect to which the Mandatory Cost Rate does apply, zero (0). The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.

Event of Default ”: any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

Excluded Individuals ”: with respect to any Person, the officers, directors, employees, agents and representatives of such Person involved, directly or indirectly, in the payment instruments and consumer funds transfer business of such Person.

Extension of Credit ”: as to any Bank, the making of a Loan or a Swing Line Loan by such Bank or the issuance of, or participation in, a Letter of Credit by such Bank.

 

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Facility Fee Rate ”: for each day during each calculation period, a rate per annum based on the Ratings in effect on such day, as set forth below:

 

Rating

   Facility
Fee Rate
 

Rating I

   0.050 %

Rating II

   0.060 %

Rating III

   0.080 %

Rating IV

   0.100 %

Rating V

   0.125 %

Federal Funds Effective Rate ”: as defined in the definition of “ABR”.

Federal Reserve Board ”: the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions.

Fee Letters ”: collectively, (a) the letter agreement dated September 7, 2006 addressed to the Company from the Administrative Agent and the Lead Arranger, as amended, modified or otherwise supplemented and (b) the letter agreement dated September __, 2006 addressed to the Company from the Syndication Agent, as amended, modified or otherwise supplemented.

Financing Lease ”: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

Fixed Rate Bid Loan ”: any Bid Loan made at a fixed rate (as opposed to a rate based upon the Eurodollar Rate).

Fixed Rate Bid Loan Request ”: any Bid Loan Request requesting the Banks to offer to make Fixed Rate Bid Loans.

Foreign Currency ”: (a) Euros and (b) British Pound Sterling.

Foreign Currency Equivalent ”: with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Foreign Currency as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) applicable to such Foreign Currency.

Foreign Currency Loan ”: any Loan denominated in a Foreign Currency.

Funded Indebtedness ”: any indebtedness for money borrowed, created, issued, incurred, assumed or guaranteed which would, in accordance with GAAP, be classified as long-term debt, but in any event including all indebtedness for money borrowed, whether secured or unsecured, maturing more than one year, or extendible at the option of the obligor to a date more than one year, after the date of determination thereof (excluding any amount thereof included in current liabilities).

 

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GAAP ”: as to a particular Person, such accounting principles as, in the opinion of the independent public accountants regularly retained by such Person, conform at the time to United States generally accepted accounting principles.

Governmental Authority ”: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

Group of Persons ” means any related Persons that would constitute a “group” for purposes of Section 13(d) and Rule 13d-5 under the Securities Exchange Act of 1934, as amended (as such Section and Rule are in effect as of the date of this Agreement).

Guarantee Obligation ”: as to any Person (the “guaranteeing person”), and without duplication, any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing the payment or in effect guaranteeing the payment of any Indebtedness (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; provided, however, that the term Guarantee Obligation shall not include (x) endorsements of instruments for deposit or collection in the ordinary course of business or (y) any bond or guarantee given by the Company or any Subsidiary on behalf of any Subsidiary solely for the performance of contractual obligations with customers or on behalf of customers in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary payment obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Company in good faith.

Indebtedness ”: of any Person at any date and without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than trade liabilities not more than 60 days past due incurred in the ordinary course of business and payable in accordance with customary practices or endorsements for the purpose of collection in the ordinary course of business and excluding the deferred purchase price of property or services to be repaid through earnings of the purchaser to the extent such amount is not characterized as indebtedness in accordance with GAAP), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of

 

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such Person under Financing Leases, (d) all payment obligations of such Person in respect of acceptances issued or created for the account of such Person and (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof; provided that, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such obligations shall be deemed to be in an amount equal to the lesser of (i) the amount of such indebtedness and (ii) the book value of the property subject to such Lien at the time of determination. For the purposes of this definition, the following shall not constitute Indebtedness: the issuance of payment instruments, consumer funds transfers, or other amounts paid to or received by the Company, any of its Subsidiaries or any agent thereof in the ordinary course of business in order for the Company or such Subsidiary to make further distribution to a third party, to the extent payment in respect thereof has been received by the Company, such Subsidiary or any agent thereof.

Information Materials ”: the Confidential Information Memorandum dated September 2006 in respect of the transactions contemplated hereby sent by Citibank to each of the Banks, including all supplements and amendments thereto.

Insolvency ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

Insolvent ”: pertaining to a condition of Insolvency.

Interest Payment Date ”: (a) as to any ABR Loan other than a Swing Line Loan, the last day of each March, June, September and December and the Termination Date, (b) as to any Eurodollar Loan having an Interest Period of three months or less or any Fixed Rate Bid Loan having an Interest Period of 90 days or less, the last day of such Interest Period, (c) as to any Eurodollar Loan or Fixed Rate Bid Loan having an Interest Period longer than three months or 90 days, respectively, each day which is three months or 90 days, respectively, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Swing Line Loan, each of the dates occurring at thirty day intervals after the Borrowing Date of such Swing Line Loan and the date of payment of principal thereof.

Interest Period ”:

(a) with respect to any Eurodollar Loan:

(i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three, six, or, subject to clause (G) of this definition, two weeks or nine or twelve months thereafter, as selected by the Company in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and

(ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three, six, or, subject to clause (G) of this definition, two weeks or nine or twelve months, thereafter, as selected by the Company by irrevocable notice to the Administrative Agent not less than (x) with respect to Eurodollar Loans denominated in Dollars, three Business Days prior to the last day of the then

 

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current Interest Period with respect thereto and (y) with respect to Eurodollar Loans denominated in Foreign Currency, four Business Days prior to the last day of the then current Interest Period with respect thereto; and

(b) with respect to any Bid Loan, the period specified in the Bid Loan Confirmation with respect to such Bid Loan;

provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(A) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(B) if any Interest Period pertaining to a Fixed Rate Bid Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day;

(C) any Interest Period that would otherwise extend beyond the Termination Date shall end on the Termination Date;

(D) if the Company shall fail to give notice as provided in clause (a)(ii) above, the Company shall be deemed to have selected (A) in the case of Loans denominated in Dollars, an ABR Loan to replace the affected Eurodollar Loan and (B) in the case of Loans denominated in Foreign Currencies, an Interest Period of one month;

(E) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;

(F) no more than eight (8) Eurodollar Loans may be in effect at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they shall begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurodollar Loan with a single Interest Period; and

(G) in the case of any such Eurodollar Loans, the Company and shall not be entitled to select an Interest Period having a duration of two weeks, nine or twelve months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Bank notifies the Administrative Agent that such Bank will be providing funding for such Eurodollar Loans with such Interest Period (the failure of any Bank to so respond by such time being deemed for all purposes of this Agreement as an objection by such Bank to the requested duration of such Interest Period); provided that, if any or all of the Banks object to the requested duration of such

 

10


Interest Period, the duration of the Interest Period for such Eurodollar Loans shall be one, two, three or six months, as specified by the Company in the applicable Borrowing Certificate as the desired alternative to an Interest Period of two weeks or nine or twelve months, provided, that the Company shall not be entitled to select an Interest Period having duration of two weeks for any Interest Period commencing later than December 29, 2006.

Issuing Lender ”: with respect to any Letter of Credit, Citibank, N.A., Wells Fargo Bank, National Association or any other Lender that has a LOC Commitment, as chosen by the Company.

Issuing Lender Fees ”: as defined in subsection 2.4.

Lead Arrangers ”: Citigroup Global Markets Inc. and Wells Fargo Bank, National Association.

Letter of Credit ” any letter of credit issued by an Issuing Lender pursuant to the terms hereof, as such Letter of Credit may be amended, modified, extended, renewed or replaced from time to time.