EXHIBIT 10.1
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SECURITIES EXCHANGE AND DISTRIBUTION AGREEMENT
DATED AS OF JUNE 25, 2006
BETWEEN
FIDELITY NATIONAL FINANCIAL, INC.
AND
FIDELITY NATIONAL TITLE GROUP, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................. 2
SECTION 1.1. Definitions.............................................. 2
SECTION 1.2. Other Definitions........................................ 6
ARTICLE II CLOSING TRANSACTIONS..................................... 7
SECTION 2.1. Asset Contribution, Assumption of Liabilities and
Delivery of Shares....................................... 7
SECTION 2.2. Closing.................................................. 8
SECTION 2.3. Closing Deliveries....................................... 8
SECTION 2.4. Conversion of FNT Class B Common Stock................... 9
SECTION 2.5. Adjustments.............................................. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES........................... 9
SECTION 3.1. Representations and Warranties of FNF.................... 9
(a) Organization, Standing and Corporate Power........... 9
(b) Capital Structure of the Subject Companies........... 9
(c) Authority; Noncontravention.......................... 11
(d) Absence of Certain Changes or Events................. 12
(e) Absence of Changes in Subject Company Benefit Plans.. 13
(f) Benefit Plans........................................ 13
(g) Taxes................................................ 14
(h) No Excess Parachute Payments; Section 162(m) of the
Code................................................. 15
(i) SEC Documents; Subject Company Financial Statements.. 15
(j) Information Supplied................................. 17
(k) Compliance with Applicable Laws...................... 18
(l) Litigation........................................... 18
(m) Brokers.............................................. 19
(n) Opinion of Financial Advisor......................... 19
(o) Other Assets......................................... 19
(p) No Guaranty of FIS Obligations....................... 19
(q) Environmental Matters................................ 19
(r) FIS Merger Agreement................................. 20
SECTION 3.2. Representations and Warranties of FNT.................... 20
(a) Organization, Standing and Corporate Power........... 20
(b) Capital Structure.................................... 21
(c) Authority; Noncontravention.......................... 22
(d) Absence of Certain Changes or Events................. 23
(e) Absence of Changes in FNT Benefit Plans.............. 24
(f) FNT Benefit Plans.................................... 24
(g) Taxes................................................ 24
(h) No Excess Parachute Payments; Section 162(m) of the
Code................................................. 25
(i) SEC Documents; Financial Statements.................. 25
(j) Information Supplied................................. 27
(k) Compliance with Applicable Laws...................... 27
(l) Litigation........................................... 28
(m) Brokers.............................................. 28
(n) Opinion of Financial Advisor......................... 28
(o) Voting Requirements.................................. 28
ARTICLE IV COVENANTS................................................ 28
SECTION 4.1. Conduct of Business...................................... 28
(a) Conduct of Business by the Subject Companies......... 28
(b) Conduct of Business by FNF........................... 31
(c) Conduct of Business by FNT........................... 32
SECTION 4.2. Advice of Changes........................................ 34
ARTICLE V ADDITIONAL AGREEMENTS.................................... 34
SECTION 5.1. Preparation of Form S-1 and the Information Statement;
Preparation of Form S-8.................................. 34
SECTION 5.2. Treatment of FNF Equity Awards........................... 35
(a) Options.............................................. 35
(b) Restricted Stock..................................... 35
(c) Vesting.............................................. 36
SECTION 5.3. Employee Benefits........................................ 36
SECTION 5.4. FNT Stockholders Meeting................................. 37
SECTION 5.5. Access to Information.................................... 37
SECTION 5.6. Reasonable Best Efforts.................................. 38
SECTION 5.7. Public Announcements..................................... 38
SECTION 5.8. Consents, Approvals and Filings.......................... 38
SECTION 5.9. Directors and Officers................................... 38
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SECTION 5.10. Section 16 Matters....................................... 39
SECTION 5.11. Related Party Agreements................................. 39
SECTION 5.12. Certain Contributions.................................... 39
SECTION 5.13. Amended and Restated Articles............................ 39
SECTION 5.14. Intercompany Agreements.................................. 39
SECTION 5.15. Spin-off................................................. 39
SECTION 5.16. Indemnification and Insurance............................ 40
SECTION 5.17. NYSE Listing............................................. 41
SECTION 5.18. Conversion of FNT Class B Common Stock................... 41
SECTION 5.19. Repayment of Promissory Notes............................ 42
ARTICLE VI CONDITIONS PRECEDENT..................................... 42
SECTION 6.1. Conditions Precedent to Each Party's Obligations......... 42
(a) Governmental and Regulatory Consents................. 42
(b) No Injunctions or Restraints......................... 42
(c) FNT Stockholder Approval............................. 42
(d) Form S-1............................................. 43
(e) FIS Merger Agreement................................. 43
(f) Amendment of Related Party Agreements................ 43
(g) Termination of Intercompany Agreements............... 43
SECTION 6.2. Conditions Precedent to Obligations of FNT............... 43
(a) Representations and Warranties....................... 43
(b) Performance of Obligations of FNF.................... 43
(c) Third-Party Consents and Waivers..................... 43
(d) Other Agreements..................................... 44
(e) Tax Matters.......................................... 44
(f) FNF Board Approval of Spin-off....................... 44
(g) Assumed Liabilities.................................. 44
SECTION 6.3. Conditions Precedent to Obligations of FNF............... 44
(a) Representations and Warranties....................... 44
(b) Performance of Obligations of FNT.................... 45
(c) Third-Party Consents and Waivers..................... 45
(d) Other Agreements..................................... 45
(e) NYSE Listing......................................... 45
(f) Tax Matters.......................................... 45
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................ 45
SECTION 7.1. Termination.............................................. 45
SECTION 7.2. Effect of Termination.................................... 46
SECTION 7.3. Amendment................................................ 46
SECTION 7.4. Extension; Waiver........................................ 46
ARTICLE VIII GENERAL PROVISIONS....................................... 47
SECTION 8.1. Nonsurvival of Representations and Warranties............ 47
SECTION 8.2. Fees and Expenses........................................ 47
SECTION 8.3. Notices.................................................. 47
SECTION 8.4. Interpretation........................................... 48
SECTION 8.5. Counterparts............................................. 48
SECTION 8.6. Entire Agreement; Third-Party Beneficiaries.............. 49
SECTION 8.7. Assignment............................................... 49
SECTION 8.8. Governing Law............................................ 49
SECTION 8.9. Enforcement; Venue; Waiver of Jury Trial................. 49
SECTION 8.10. Severability............................................. 50
EXHIBITS
Exhibit A Form of Amended and Restated Articles
Exhibit B Form of Assumption Agreement
Exhibit C Form of Cross-Indemnity Agreement
Exhibit D Form of Tax Disaffiliation Agreement
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SECURITIES EXCHANGE AND DISTRIBUTION AGREEMENT
SECURITIES EXCHANGE AND DISTRIBUTION AGREEMENT, dated as of June 25,
2006 (this "Agreement"), between Fidelity National Financial, Inc., a Delaware
corporation ("FNF"), and Fidelity National Title Group, Inc., a Delaware
corporation ("FNT").
WHEREAS, FNF owns (i) all of the issued and outstanding shares of
capital stock or other equity securities (the "Scheduled Securities") of the
entities listed on Schedule A to this Agreement (the "Scheduled Entities"); (ii)
14,400,000 shares of common stock of Fidelity Sedgwick Holdings, Inc., a
Delaware corporation ("FSH"; such shares, the "FSH Shares"); and (iii) 70,720
membership interests in Cascade Timberlands LLC, a Delaware limited liability
company ("Cascade" and, collectively with the Scheduled Entities and FSH, the
"Subject Companies"; such membership interests, the "Cascade Interests" and,
collectively with the Scheduled Securities and the FSH Shares, the "Subject
Securities");
WHEREAS, FNF owns the Other Assets (as hereinafter defined);
WHEREAS, FNF desires to transfer to FNT, and FNT desires to acquire
from FNF, all of the Subject Securities and all of the Other Assets in exchange
for the issuance by FNT to FNF of the FNT Shares (as hereinafter defined) and
the assumption by FNT of the Assumed Liabilities (as hereinafter defined)
(collectively, the "Asset Contribution");
WHEREAS, the board of directors of FNT has resolved to recommend to
the stockholders of FNT that they approve (i) the issuance of the FNT Shares,
(ii) the adoption of an amendment to the FNT 2005 Omnibus Incentive Plan (the
"FNT Stock Plan") to increase the number of shares available for grants
thereunder by 6,500,000 (the "FNT Stock Plan Amendment") and (iii) an amendment
and restatement of the articles of incorporation of FNT to be effected
immediately following the effective time of the FIS Merger (as hereinafter
defined) such that, after giving effect thereto, the articles of incorporation
of FNT shall be substantially in the form of Exhibit A hereto (the "Amended and
Restated Articles") and, among other things, the name of FNT shall be "Fidelity
National Financial, Inc."; and
WHEREAS, the board of directors of FNF has approved the conversion by
FNF of its shares of FNT Class B Common Stock into shares of FNT Class A Common
Stock and the distribution, following the Closing, of all of the shares of FNT
Class A Common Stock held by FNF to the holders of the outstanding shares of
capital stock of FNF as of the Record Date (as defined herein) for such
distribution (the "Spin-off");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, FNF and FNT agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
Action or Proceeding: means any charge, complaint, grievance, action,
suit, litigation, proceeding or arbitration, whether civil, criminal,
administrative or investigative, by any Person, or any investigation or audit by
any Governmental Entity.
affiliate: of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
Assumed Liabilities: means all Liabilities of FNF, including the FNF
Transaction Liabilities to the extent not paid by FNF prior to the Closing as
required by Section 8.2, but excluding (i) all Liabilities of FNF to the extent
FIS or any subsidiary of FIS has, as of or prior to the Closing, agreed in
writing to be responsible therefor, (ii) all Liabilities of FNF to the extent
arising out of or related to the ownership or operation of the assets or
properties, or the operations or conduct of the business, of FIS or any
subsidiary of FIS, to the extent FIS or any subsidiary of FIS has, as of or
prior to the Closing, agreed to be responsible therefor, (iii) all guaranties or
other similar contractual Liabilities of FNF in respect of a primary Liability
of FIS or any subsidiary of FIS, and (iv) any Liability of FNF in respect of
Taxes (as defined in the Tax Disaffiliation Agreement).
Code: means the Internal Revenue Code of 1986, as amended.
Disclosure Schedule: means the Disclosure Schedule (including any
attachments thereto) delivered in connection with, and constituting a part of,
this Agreement.
Dual Service Provider: means an employee or director of FNF, who,
following the Spin-off, will be employed by or serve as a director of both (a)
FNT or any FNT Subsidiary and (b) FIS or any subsidiary of FIS, as so designated
by the board of directors of FNF.
Environment: means ambient air, surface water, ground water, land
surface or subsurface strata.
Environmental Claim: means, with respect to any Person, any written
notice or claim by any other Person alleging or asserting Liability for
investigatory costs, cleanup costs, response costs, personal injury, damage to
natural resources and fines or penalties arising out of, based on or resulting
from (a) the presence or release into the Environment of any Hazardous Material
or (b) circumstances forming the basis of any violation or alleged violation of,
or Liability or alleged Liability under, any Environmental Law.
Environmental Law: means any Law concerning pollution or protection of
the Environment, including all those relating to the use, production,
generation, handling,
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transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control or cleanup of any
Hazardous Material.
Exchange Number: means the sum of (a) 34,042,553 and (b) (i) the
amount of cash included in the Other Assets, not to exceed $275,000,000, divided
by (ii) $23.5.
Excluded FNF Assets: means (i) any shares of capital stock of FNT, FIS
or National Title Insurance of New York, Inc. and (ii) any other assets listed
on Section 1.1(a) of the Disclosure Schedule.
FIS: means Fidelity National Information Services, Inc.
FIS Merger: means the merger of FNF into FIS pursuant to the FIS
Merger Agreement.
FIS Merger Agreement: means the merger agreement, of even date
herewith, between FNF and FIS, providing for, among other things, the FIS
Merger.
FNF Material Adverse Effect: means (x) any event, circumstance or
change that, individually or in the aggregate, is or would reasonably be likely
to be materially adverse to the assets, Liabilities, business, condition
(financial or otherwise) or results of operations of the Transferred Business
taken as a whole, other than any such event, circumstance or change to the
extent resulting from (A) changes in general economic conditions affecting the
United States occurring after the date hereof, (B) general changes or
developments in the industries in which the Transferred Business is operated
occurring after the date hereof, (C) changes in laws or regulations occurring
after the date hereof or (D) the announcement of this Agreement and the
transactions contemplated hereby, including any termination of, reduction in or
similar negative impact on the relationships, contractual or otherwise, with any
customers, distributors, partners or employees of the Subject Companies or the
Subject Company Subsidiaries to the extent due to the announcement of this
Agreement or the identity of the parties hereto, unless, in the case of the
foregoing clause (A) or (B), such changes referred to therein have a materially
disproportionate effect on the Transferred Business, taken as a whole, relative
to other participants in the industries in which the Transferred Business is
operated, or (y) any material adverse effect on the ability of FNF to perform
its obligations hereunder or to consummate the transactions contemplated hereby
on a timely basis.
FNF Transaction Liabilities: means all Liabilities of FNF, whether due
or to become due, for all out-of-pocket expenses (including all fees and
disbursements of financial advisors, legal counsel and other advisors and
consultants to FNF and the special committee of the board of directors of FNF)
incurred in connection with the Asset Contribution, the Spin-off, the FIS Merger
and the other transactions contemplated by this Agreement.
FNT Class A Common Stock: means FNT Class A Common Stock, par value
$0.0001 per share.
FNT Class B Common Stock: means FNT Class B Common Stock, par value
$0.0001 per share.
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FNT Common Stock: means, collectively, FNT Class A Common Stock and
FNT Class B Common Stock.
Form S-1: a registration statement on Form S-1 (or Form S-4, if
available) under the Securities Act to be filed with the SEC, if required, in
respect of the distribution to stockholders of FNF of shares of common stock of
FNT by FNF in connection with the Spin-off.
Form S-8: means a registration statement on Form S-8 under the
Securities Act to be filed with the SEC in respect of the Replacement Options.
GAAP: means U.S. generally accepted accounting principles,
consistently applied.
Hazardous Material: means any hazardous material, toxic substance,
pollutant or hazardous waste (including any petroleum products or byproducts)
defined or regulated as such under any Environmental Laws.
HSR Act: the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
Information Statement: the Information Statement to be filed with the
SEC by FNT pursuant to Regulation 14C under the Exchange Act relating to the FNT
Stockholder Approval, which may form part of the Form S-1 (if permitted).
Lien: means any mortgage, pledge, deed of trust, claim, security
interest, encumbrance, burden, title defect, charge or other similar
restriction, lease, sublease, claim, right of others, title retention agreement,
option, interest, easement, covenant, encroachment or other adverse claim.
Liabilities: means any direct or indirect liability, indebtedness,
claim, loss, damage, deficiency, obligation, penalty, responsibility, cost or
expense, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, known or unknown, contingent or
otherwise.
NYSE: means the New York Stock Exchange, Inc.
Option Letter Agreement: means the agreement of even date herewith
among FNF, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
Organizational Documents: as to any Person, its certificate or
articles of incorporation or formation, by-laws and other organizational
documents.
Other Assets: means all cash held by FNF as of the Closing and all
other properties, assets and rights of any nature, kind and description,
tangible and intangible (including goodwill), whether real, personal or mixed,
held by FNF immediately prior to the Closing, other than (i) the Subject
Securities and (ii) the Excluded FNF Assets.
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Permitted Liens: means any (a) Lien that constitutes an Assumed
Liability, (b) any Lien arising from acts of FNT, (c) any Lien for taxes not yet
due or delinquent or being contested in good faith by appropriate proceedings
and for which adequate accruals or reserves (as determined according to GAAP)
have been established on the appropriate financial statements with respect
thereto, (d) any Lien (other than for taxes) arising by operation of statute and
(e) any Lien set forth on Section 1.1(b) of the Disclosure Schedule.
Person: means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
Record Date: means the close of business on the date to be determined
by the FNF board of directors as the record date for determining the
stockholders of FNF entitled to receive shares of FNT Class A Common Stock
pursuant to a pro-rata distribution of shares of FNT Class A Common Stock as
part of the Spin-off.
SAP: means, with respect to any regulated insurance company, the
statutory accounting practices prescribed or permitted by the state Governmental
Entity charged with supervision of insurance companies in the domiciliary state
of such company.
Subject Company Material Adverse Effect: means, as to any Subject
Company or any of its subsidiaries, any event, circumstance or change that,
individually or in the aggregate, is or would reasonably be likely to be
materially adverse to the assets, Liabilities, business, condition (financial or
otherwise) or results of operations of such Subject Company (or, in the case of
a Subject Company Subsidiary, the Subject Company of which such entity is a
subsidiary) and its subsidiaries taken as a whole, other than any such event,
circumstance or change to the extent resulting from (A) changes in general
economic conditions affecting the United States occurring after the date hereof,
(B) general changes or developments in the industries in which such Subject
Company and its subsidiaries operate occurring after the date hereof, (C)
changes in laws or regulations occurring after the date hereof or (D) the
announcement of this Agreement and the transactions contemplated hereby,
including any termination of, reduction in or similar negative impact on the
relationships, contractual or otherwise, with any customers, distributors,
partners or employees of such Subject Company or any of it subsidiaries to the
extent due to the announcement of this Agreement or the identity of the parties
hereto, unless, in the case of the foregoing clause (A) or (B), such changes
referred to therein have a materially disproportionate effect on such Subject
Company and its subsidiaries, taken as a whole, relative to other participants
in the industries in which such Subject Company and such subsidiaries operate.
Subject Company Subsidiary: means a subsidiary of a Subject Company.
subsidiary: of any Person means another Person 50% or more of the
total combined voting power of all classes of capital stock or other voting
interests of which, or 50% of more of the equity securities of which, is owned
directly or indirectly by such first Person; provided that for purposes of this
Agreement FNT and the FNT Subsidiaries shall not be considered subsidiaries of
FNF.
Transferred Business: means, collectively, the Subject Companies, the
Subject Company Subsidiaries, the Other Assets and the Assumed Liabilities.
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SECTION 1.2. Other Definitions. In addition, the following capitalized
terms are defined in the Sections or other provisions of this Agreement set
forth below:
Agreement................................................. Preamble
Amended And Restated Articles............................. Recitals
Asset Contribution........................................ Recitals
Assumption Agreement...................................... Section 2.3(d)
Cascade................................................... Recitals
Cascade Interests......................................... Recitals
Cascade LLC Agreement..................................... Section 3.1(b)
Closing................................................... Section 2.2
Closing Date.............................................. Section 2.2
Cross-Indemnity Agreement................................. Section 2.3(f)
ERISA..................................................... Section 3.1(f)
Exchange Act.............................................. Section 3.1(c)
Executive Officers........................................ Section 3.1(d)
Filed FNF SEC Documents................................... Section 3.1(d)
Filed FNT SEC Documents................................... Section 3.2(d)
FIS....................................................... Section 4.1(b)
FNF....................................................... Preamble
FNF Insurance Company..................................... Section 3.1(i)
FNF Option................................................ Section 5.2(a)
FNF Restricted Shares..................................... Section 5.2(b)
FNF SEC Documents......................................... Section 3.1(i)
FNT....................................................... Preamble
FNT Benefit Plans......................................... Section 3.2(f)
FNT Commonly Controlled Entity............................ Section 3.2(f)
FNT Insurance Company..................................... Section 3.2(i)
FNT Material Adverse Effect............................... Section 3.2(a)
FNT Preferred Stock....................................... Section 3.2(b)
FNT SEC Documents......................................... Section 3.2(i)
FNT Service Providers..................................... Section 5.2
FNT Shares................................................ Section 2.1(a)
FNT Stock Plan............................................ Recitals
FNT Stock Plan Amendment.................................. Recitals
FNT Stockholder Approval.................................. Section 3.2(c)
FNT Stockholders Meeting.................................. Section 5.4
FNT Subsidiary............................................ Section 3.2(a)
FSH....................................................... Recitals
FSH Shares................................................ Recitals
Governmental Entity....................................... Section 3.1(c)
Indemnified Parties....................................... Section 5.16(a)
Insurance Regulator....................................... Section 3.1(k)
Intercompany Agreements................................... Section 5.14
IRS....................................................... Section 3.1(g)
Jacksonville Court........................................ Section 8.9
Non-Specialty Insurance Companies......................... Section 3.1(i)
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Non-Specialty Insurance Company Balance Sheet............. Section 3.1(i)
Pension Plan.............................................. Section 3.1(f)
Permit.................................................... Section 3.1(k)
Related Party Agreements.................................. Section 5.11
Replacement Option........................................ Section 5.2(a)
Replacement Restricted Share.............................. Section 5.2(b)
Representatives........................................... Section 5.5
Restricted Share Exchange Number.......................... Section 5.2(b)
Scheduled Entities........................................ Recitals
Scheduled Securities...................................... Recitals
SEC....................................................... Section 3.1(c)
Securities Act............................................ Section 3.1(i)
Specialty Insurance Companies............................. Section 3.1(i)
Specialty Insurance Company Financial Statements.......... Section 3.1(i)
Spin-off.................................................. Recitals
Spin-off Declaration...................................... Section 5.15
Subject Companies......................................... Recitals
Subject Company Benefit Plans............................. Section 3.1(f)
Subject Company Commonly Controlled Entity................ Section 3.1(f)
Subject Company Financial Statements...................... Section 3.1(i)
Subject Securities........................................ Recitals
Tax Disaffiliation Agreement.............................. Section 2.3(e)
Transfer Agent............................................ Section 5.15
Unconsolidated FNF Financial Statements................... Section 3.1(i)(iii)
Welfare Plan.............................................. Section 3.1(f)
ARTICLE II
CLOSING TRANSACTIONS
SECTION 2.1. Asset Contribution, Assumption of Liabilities and
Delivery of Shares. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined):
(a) FNF shall transfer to FNT all right, title and interest of FNF in
and to all of the Subject Securities and all right, title and interest of
FNF in and to the Other Assets in exchange for (i) the Exchange Number of
shares (the "FNT Shares") of FNT Class A Common Stock, and (ii) the
assumption by FNT of the Assumed Liabilities; and
(b) FNT shall issue and deliver the FNT Shares to FNF and assume and
agree to pay, honor and discharge when due all of the Assumed Liabilities
in accordance with their respective terms pursuant to the Assumption
Agreement (as hereinafter defined), in exchange for the Subject Securities
and the Other Assets.
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SECTION 2.2. Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.1 and subject to the satisfaction or waiver of each of the
conditions set forth in Article VI, the transfer by FNF to FNT of the Subject
Securities and Other Assets, the issuance and delivery by FNT to FNF of the FNT
Shares and the assumption by FNT of the Assumed Liabilities (the "Closing")
shall take place at 9:00 a.m. on the date that is the seventh day following the
date on which the last to be fulfilled or waived of the conditions set forth in
Article VI (other than those to be fulfilled or waived as of the Closing) shall
be fulfilled or waived in accordance with this Agreement, at the offices of
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
unless another date, time or place is agreed to in writing by the parties
hereto. The actual date and time of the Closing are herein referred to as the
"Closing Date."
SECTION 2.3. Closing Deliveries. At the Closing:
(a) FNF shall deliver to FNT certificates representing the respective
Subject Securities, together with duly executed transfer forms including
all such deeds, instruments, stock powers, transfer stamps or other
documents as may be necessary to transfer full legal and beneficial
ownership of such Subject Securities to FNT, free and clear of all Liens
other than Permitted Liens;
(b) FNF shall execute and deliver to FNT a ▇▇▇▇ of sale and such other
deeds, instruments or other documents (each in substance and form
reasonably satisfactory to FNT) as may be necessary to transfer full legal
and beneficial title to the Other Assets to FNT, free and clear of all
Liens other than Permitted Liens, and any cash that is a part of the Other
Assets shall be paid by wire transfer of immediately available funds to an
account designated by FNT to FNF in writing no later than two Business Days
before the Closing;
(c) FNT shall issue and deliver to FNF the FNT Shares, free and clear
of all Liens;
(d) FNT shall execute and deliver to FNF an assumption agreement with
respect to the Assumed Liabilities in the form attached hereto as Exhibit B
(the "Assumption Agreement");
(e) FNT and FNF shall execute and deliver, and FNF shall cause FIS to
execute and deliver, a tax disaffiliation agreement in the form attached as
Exhibit C ("Tax Disaffiliation Agreement");
(f) FNT shall execute and deliver, and FNF shall cause FIS to execute
and deliver, a cross-indemnity agreement in the form attached as Exhibit D
(the "Cross-Indemnity Agreement"); and
(g) FNF shall deliver to FNT the certificate referred to in Section
6.2(a) and FNT shall deliver to FNF the certificate referred to in Section
6.3(a).
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SECTION 2.4. Conversion of FNT Class B Common Stock. FNF shall convert
all shares of FNT Class B Common Stock held by it into shares of FNT Class A
Common Stock in accordance with Section 5.18.
SECTION 2.5. Adjustments. Notwithstanding anything in this Agreement
to the contrary, if, between the date of this Agreement and the Closing Date,
the issued and outstanding shares of capital stock of FNT or securities
convertible or exchangeable into or exercisable for shares of capital stock of
FNT shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, redenomination,
merger, issuer tender or exchange offer, or other similar transaction (other
than repurchase of shares, issuance of shares pursuant to exercise of stock
options or grants of stock options to employees made in the ordinary course of
business consistent with past practice), then the consideration set forth in
Section 2.1(a) of this Agreement and any other dependent items shall be
equitably adjusted and as so adjusted shall, from and after the date of such
event, be such consideration or other dependent item.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of FNF. FNF represents and
warrants to FNT as follows:
(a) Organization, Standing and Corporate Power. Each of FNF, each
Subject Company and each Subject Company Subsidiary (as hereinafter
defined) is a corporation, limited liability company or other legal entity
duly organized, validly existing and in good standing (in such
jurisdictions where such concept is applicable) under the laws of the
jurisdiction of its organization and has the requisite corporate, limited
liability company or other entity power and authority to carry on its
business as now being conducted. Each of FNF, the Subject Companies and the
Subject Company Subsidiaries is duly qualified to do business and is in
good standing (in such jurisdictions where such concept is applicable) in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in
such jurisdictions where the failure to be so qualified (individually or in
the aggregate) would not have an FNF Material Adverse Effect (in the case
of FNF) or a Subject Company Material Adverse Effect (in the case of such
Subject Company and its subsidiaries). True and complete copies of the
Organizational Documents of each Subject Company and each Subject Company
Subsidiary as in effect on the date hereof have been heretofore made
available to FNT.
(b) Capital Structure of the Subject Companies.
(i) Section 3.1(b)(i) of the Disclosure Schedule sets forth for
each Subject Company: (i) the number, type, class and series of equity
securities of such Subject Company that are (x) in the case of any
Subject Company that is a wholly-owned subsidiary of FNF, issued and
outstanding, or (y) in the case of any
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Subject Company that is not a wholly-owned subsidiary of FNF, issued
and outstanding as of May 31, 2006; (ii) the number of equity
securities of such Subject Company reserved for issuance pursuant to
outstanding options, warrants or other similar rights; and (iii) the
number of equity securities of such Subject Company held by FNF or by
such Subject Company in its treasury. Except as set forth above, (A)
as of May 31, 2006, no shares of capital stock or other equity
securities of any Subject Company that is not a wholly-owned
subsidiary of FNF are issued, reserved for issuance or outstanding,
and (B) no shares of capital stock or other equity securities of any
Subject Company that is a wholly-owned subsidiary of FNF are issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock, membership interests or other equity securities of each
Subject Company are, and all shares, membership interests or other
equity securities that may be issued pursuant to any employee stock
plan, options, warrants or other similar rights will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of any Subject Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of any Subject Company
may vote are issued or outstanding. Except as set forth in Section
3.1(b)(i) of the Disclosure Schedule, FNF is the record and beneficial
owner of all of the outstanding shares of capital stock, membership
interests or other equity securities of each Subject Company, free and
clear of all Liens, but in the case of the Cascade Interests, subject
to the terms of the Cascade Timberlands LLC Amended and Restated
Limited Liability Company Agreement dated as of December 31, 2004 (the
"Cascade LLC Agreement"). Except as set forth in Section 3.1(b)(i) of
the Disclosure Schedule, there are no securities, preemptive rights,
options, warrants, rights, commitments or agreements of any kind to
which FNF or any Subject Company is a party or by which any of them is
bound obligating any of them to issue, sell or deliver, or repurchase,
redeem or otherwise acquire, shares of capital stock or other equity
or voting securities of any Subject Company, or obligating any of them
to issue, sell, deliver, grant, extend or enter into any such
security, option, warrant, right, commitment or agreement. Except as
set forth in Section 3.1(b)(i) of the Disclosure Schedule, neither FNF
nor any Subject Company is a party to or bound by any agreement,
proxy, voting trust or other arrangement restricting the transfer of
any Subject Securities or affecting the voting of any shares of
capital stock of FNF or of any Subject Securities. Assuming FNT has
the requisite power and authority to be the lawful owner of the
Subject Securities, upon the consummation of the transactions
contemplated by this Agreement, good and valid title to the Subject
Securities will pass to FNT, free and clear of all Liens other than
Permitted Liens and in the case of the Cascade Interests, subject to
the terms of the Cascade LLC Agreement.
(ii) Section 3.1(b)(ii) of the Disclosure Schedule lists each
Subject Company Subsidiary. Except as set forth in Section 3.1(b)(ii)
of the Disclosure Schedule, all of the outstanding shares of capital
stock or other equity securities of each Subject Company Subsidiary
have been validly issued and are fully paid and non-assessable (in the
case of any Subject Company Subsidiary that is not
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organized in the United States, to the extent such concepts are
applicable) and are owned by such Subject Company, free and clear of
all Liens other than Permitted Liens. No bonds, debentures, notes or
other indebtedness of any Subject Company Subsidiary having the right
to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which the stockholders of any
Subject Company Subsidiary may vote are issued or outstanding. Except
as set forth in Section 3.1(b)(ii) of the Disclosure Schedule, there
are no securities, preemptive rights, options, warrants, rights,
commitments or agreements of any kind to which any Subject Company or
any Subject Company Subsidiary is a party or by which any of them is
bound obligating any of them to issue, sell or deliver, or repurchase,
redeem or otherwise acquire, shares of capital stock or other equity
or voting securities of any Subject Company Subsidiary, or obligating
any of them to issue, sell, deliver, grant, extend or enter into any
such security, option, warrant, right, commitment or agreement. Except
as set forth in Section 3.1(b)(ii) of the Disclosure Schedule, no
Subject Company nor any Subject Company Subsidiary is a party to or
bound by any agreement, proxy, voting trust or other arrangement
restricting the transfer or affecting the voting of any shares of
capital stock of any Subject Company Subsidiary. Except for the
capital stock or other equity securities of the Subject Companies and
the Subject Company Subsidiaries and the other ownership interests
listed in Section 3.1(b)(ii) of the Disclosure Schedule, none of FNF,
the Subject Companies or the Subject Company Subsidiaries owns,
directly or indirectly, any capital stock or other ownership interest
in any Person other than interests held for investment purposes that
do not exceed 10% of the voting securities of any such single Person.
Except as set forth in Section 3.1(b)(ii) of the Disclosure Schedule
or for investment portfolio activities of any FNF Insurance Company,
none of FNF or, to the knowledge of FNF, the Subject Companies (other
than FSH or Cascade) or the Subject Company Subsidiaries (other than
any subsidiary of FSH or Cascade) is subject to any obligation or
requirement or has entered into any agreement to make any investment
(in the form of a capital contribution, loan or otherwise) in any
Person other than in Subject Companies (other than FSH or Cascade) and
Subject Company Subsidiaries (other than any subsidiary of FSH or
Cascade).
(iii) Section 3.1(b)(iii) of the Disclosure Schedule sets forth
all outstanding stock options, grants of restricted stock, stock
appreciation rights, phantom stock, equity awards, and similar rights
with respect to FNF as of May 31, 2006, and identifies which options
and rights are subject to FNT's obligation to grant Replacement
Options or Replacement Restricted Shares (as defined herein) pursuant
to Section 5.2 hereof.
(c) Authority; Noncontravention. FNF has the requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by FNF and the consummation by FNF of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of FNF. This Agreement has been duly executed and
delivered by FNF and, assuming this Agreement constitutes the valid and
binding agreement of FNT, constitutes a valid and binding obligation of
FNF,
-11-
enforceable against FNF in accordance with its terms, subject to the effect
of any applicable bankruptcy, insolvency (including all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally and subject to the effect of general principles
of equity. Except as set forth in Section 3.1(c) of the Disclosure
Schedule, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, (x) conflict with any of
the provisions of the Organizational Documents of FNF or of any Subject
Company or Subject Company Subsidiary, (y) subject to the matters referred
to in the next sentence, conflict with, result in a breach of or default
(with or without notice or lapse of time, or both) under, give rise to a
right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, require the consent of any Person under,
or result in the creation of any Lien on any property or asset of FNF or
any Subject Company or Subject Company Subsidiary under, any indenture or
other agreement, permit, franchise, license or other instrument or
undertaking to which FNF or such Subject Company or Subject Company
Subsidiary is a party or by which FNF or any Subject Company or Subject
Company Subsidiary or any of their assets is bound or affected, or (z)
subject to the matters referred to in the next sentence, contravene any
statute, law, ordinance, rule, regulation, order, judgment, injunction,
decree, determination or award applicable to FNF or any Subject Company or
Subject Company Subsidiary or any of their respective properties or assets,
which, in the case of clauses (y) and (z) above, individually or in the
aggregate, would reasonably be expected to have an FNF Material Adverse
Effect (in the case of FNF) or a Subject Company Material Adverse Effect
(in the case of any Subject Company and its subsidiaries). No consent,
approval or authorization of, or declaration or filing with, or notice to,
any court, tribunal, arbitrator or any government or political subdivision
thereof, whether federal, state, county, local or foreign, or any agency,
authority, official or instrumentality of any such government or political
subdivision (a "Governmental Entity"), is required by or with respect to
FNF, the Subject Companies or any of the Subject Company Subsidiaries in
connection with the execution and delivery of this Agreement by FNF or the
consummation by FNF of the transactions contemplated hereby, except for (i)
the approvals, filings or notices required under the insurance laws of the
jurisdictions set forth in Section 3.1(c) of the Disclosure Schedule, (ii)
the filing with the Securities and Exchange Commission (the "SEC") of such
reports and other filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) the
filing with the SEC of the Form S-1, (iv) such other consents, approvals,
authorizations, declarations, filings or notices as are set forth in
Section 3.1(c) of the Disclosure Schedule, and (v) such other consents,
approvals, authorizations, declarations, filings or notices the failure to
obtain or make which, in the aggregate, would not have an FNF Material
Adverse Effect (in the case of FNF) or a Subject Company Material Adverse
Effect (in the case of any Subject Company and its subsidiaries).
(d) Absence of Certain Changes or Events. Except as set forth in the
FNF SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed FNF SEC Documents") or Section 3.1(d) of the
Disclosure Schedule or in connection with the transactions contemplated
hereby, since December 31, 2005, each of
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FNF, the Subject Companies and the Subject Company Subsidiaries has
conducted its business only in the ordinary course consistent with past
practice, and there has not been (i) any change, circumstance, effect,
event, development or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have an FNF Material Adverse
Effect (in the case of FNF) or a Subject Company Material Adverse Effect
(in the case of any Subject Company and its subsidiaries), (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of FNF's or the
Subject Company's outstanding equity securities (except, in the case of
FNF, for ordinary quarterly cash dividends), (iii) any split, combination
or reclassification of any of the Subject Companies' outstanding equity
securities or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for its
outstanding equity securities, (iv) (x) any granting by any Subject Company
to any of the President, the Chief Executive Officer, the Chief Financial
Officer, the General Counsel or any Executive Vice President (the
"Executive Officers") of such Subject Company of any increase in
compensation, except in the ordinary course of business consistent with
prior practice or as was required under employment agreements in effect as
of December 31, 2005, (y) any granting by any Subject Company to any such
Executive Officer of any increase in severance or termination pay, except
as was required under any employment, severance or termination agreements
in effect as of December 31, 2005 or (z) any entry by any Subject Company
into any employment, severance or termination agreement with any such
Executive Officer or (v) any change in accounting methods, principles or
practices by any Subject Company or Subject Company Subsidiary materially
affecting its assets, liabilities or business, including in the case of any
FNF Insurance Company (as hereinafter defined), any change with respect to
the establishment of reserves for unearned premiums, losses and loss
adjustment expenses, except insofar as may have been required by a change
in GAAP or SAP.
(e) Absence of Changes in Subject Company Benefit Plans. Except as set
forth in Section 3.1(e) of the Disclosure Schedule, since December 31,
2005, there has not been any adoption or material amendment by any Subject
Company or any Subject Company Subsidiary of any collective bargaining
agreement or any Subject Company Benefit Plan (as defined in Section
3.1(f)).
(f) Benefit Plans. (i) Each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (hereinafter a "Pension Plan"), "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) (hereinafter a
"Welfare Plan"), and each other plan, arrangement or policy (written or
oral) relating to compensation, deferred compensation, severance, fringe
benefits or other employee benefits, in each case maintained or contributed
to, or required to be maintained or contributed to, by FNF, any Subject
Company or any Subject Company Subsidiary for the benefit of any present or
former officer, employee, agent, director or independent contractor of FNF,
such Subject Company or such Subject Company Subsidiary (all the foregoing
being herein called "Subject Company Benefit Plans") has been established,
funded, maintained and administered in all material respects in accordance
with its terms and in compliance in all
-13-
material respects with the applicable provisions of ERISA, the Code, all
other applicable laws and all applicable collective bargaining agreements.
(ii) None of FNF, the Subject Companies, the Subject Company
Subsidiaries or any other Person or entity that together with such
Subject Company is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (each a "Subject Company Commonly
Controlled Entity") has incurred any material Liability under Title IV
of ERISA (other than for the payment of benefits or Pension Benefit
Guaranty Corporation insurance premiums, in either case in the
ordinary course).
(iii) No Subject Company Commonly Controlled Entity is obligated
to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from or incurred any contractual
Liability to any multiemployer plan resulting or which would
reasonably be expected to result in any material "withdrawal
liability" (within the meaning of Section 4201 of ERISA) that has not
been fully paid.
(iv) There are no material Actions or Proceedings pending with
respect to any Subject Company Benefit Plans, other than routine
benefit claims, qualified domestic relations orders (as defined in
Section 206(d) of ERISA) and qualified medical child support orders
(as defined in Section 609 of ERISA) and, to FNF's knowledge, no such
material Actions or Proceedings are threatened.
(g) Taxes. (i) Each of FNF, the Subject Companies and the Subject
Company Subsidiaries has timely filed (taking into account all available
extensions) all material tax returns and material reports required to be
filed by it or requests for extensions to file such returns or reports have
been timely filed, granted and have not expired. All tax returns filed by
FNF, the Subject Companies and the Subject Company Subsidiaries are
complete and accurate in all material respects. Each of FNF, the Subject
Company and each Subject Company Subsidiary has paid (or FNF or such
Subject Company has paid on such Subject Company Subsidiaries' behalf) all
taxes shown as due on such returns, and the Subject Company Financial
Statements and the financial statements contained in the Filed FNF SEC
Documents, as the case may be, reflect an adequate reserve for all taxes
payable by FNF, the Subject Companies and the Subject Company Subsidiaries
for all taxable periods and portions thereof accrued through the date of
such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted
or assessed against FNF, any Subject Company or any Subject Company
Subsidiary that are not adequately reserved for, except for
deficiencies that, individually or in the aggregate, would not have an
FNF Material Adverse Effect (in the case of FNF) or a Subject Company
Material Adverse Effect (in the case of such Subject Company and its
subsidiaries), and no requests for waivers of the time to assess any
such taxes have been granted or are pending. Except as set forth in
Section 3.1(g) of the Disclosure Schedule, the Federal and state
income tax returns of FNF, each Subject Company and each of its
subsidiaries consolidated in such
-14-
returns have been examined by and settled with the United States
Internal Revenue Service (the "IRS") or the appropriate state taxation
authorities, as the case may be, or the statute of limitations on
assessment or collection of any Federal or state income taxes due from
such Subject Company or any of its subsidiaries has expired, for all
taxable years of such Subject Company or any of its subsidiaries
through the taxable year ended December 31, (a) 2001 for Federal
income tax purposes and (b) 1999 for state income tax purposes.
(iii) As used in this Agreement, "taxes" shall include all
federal, state, local and foreign income, franchise, premium,
property, sales, excise, employment, payroll, withholding and other
taxes, tariffs or other governmental charges, including interest,
penalties and other additions.
(h) No Excess Parachute Payments; Section 162(m) of the Code. (i)
Except as set forth in Section 3.1(h) of the Disclosure Schedule, none of
the transactions contemplated by this Agreement shall constitute a
triggering event under any employment, severance or termination agreement
or other compensation arrangement or Subject Company Benefit Plan currently
in effect which (either alone or upon the occurrence of any additional or
subsequent event) would reasonably be expected to result in any payment,
acceleration, vesting or increase in benefits to any current or former
officer, employee or director of FNF or of any Subject Company or any of
its subsidiaries and which would constitute an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code).
(ii) Except as set forth in Section 3.1(h) of the Disclosure
Schedule or as would not, individually or in the aggregate, reasonably
be expected to have an FNF Material Adverse Effect (in the case of
FNF) or a Subject Company Material Adverse Effect (in the case of such
Subject Company and its subsidiaries), the disallowance of a deduction
under Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by FNF, any Subject Company or any
Subject Company Subsidiary under any contract, Subject Company Benefit
Plan, program, arrangement or understanding currently in effect.
(i) SEC Documents; Subject Company Financial Statements.
(i) FNF has filed all reports, schedules, forms, statements and
other documents required to be filed with the SEC since January 1,
2004 (the "FNF SEC Documents"). As of their respective dates, the FNF
SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act") or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such FNF SEC Documents, and none of the FNF
SEC Documents as of such dates contained any untrue statement of a
material fact or omitted to state a 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. Except to the extent that information contained in any FNF
SEC Document has been revised or
-15-
superseded by a later Filed FNF SEC Document (as defined in Section
3.1(d)), none of the FNF SEC Documents contains any untrue statement
of a material fact or omits 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.
(ii) FNF has delivered or made available to FNT copies (which
copies are complete and correct) of (A) the unaudited combined balance
sheets and related statements of income of Fidelity National Insurance
Company, Fidelity National Insurance Services, Inc. and National
Alliance Marketing Group, Inc. and their respective consolidated
subsidiaries (collectively, the "Specialty Insurance Companies") for
the 2004 and 2005 fiscal years and as of March 31, 2006 and for the
three months then ended (the "Specialty Insurance Company Financial
Statements"), and (B) the unaudited consolidated balance sheet of FNF
and its subsidiaries other than FNT, FIS and the Specialty Insurance
Companies (such subsidiaries, the "Non-Specialty Insurance Companies")
as of April 30, 2006 (the "Non-Specialty Insurance Company Balance
Sheet" and, collectively with the Specialty Insurance Company
Financial Statements, the "Subject Company Financial Statements").
Except as set forth on Section 3.1(i)(ii) of the Disclosure Schedule,
the Specialty Insurance Company Financial Statements were prepared in
accordance with GAAP applied on a consistent basis and present fairly
in all material respects the financial condition at their respective
dates and results of operations of the Specialty Insurance Companies
on a combined basis for the periods then ended, subject to the absence
of cash flow statements and footnotes and, in the case of the interim
financial statements contained therein, to normal year-end
adjustments. Except as set forth on Section 3.1(i)(ii) of the
Disclosure Schedule, the Non-Specialty Insurance Company Balance Sheet
was prepared in accordance with GAAP applied on a consistent basis and
presents fairly in all material respects the financial condition at
April 30, 2006 of FNF and the Non-Specialty Insurance Companies on a
consolidated basis, subject to the absence of cash flow statements and
footnotes and to normal year-end adjustments. Except as set forth in
the Subject Company Financial Statements or in Section 3.1(i)(ii) of
the Disclosure Schedule, no Subject Company or any of its subsidiaries
has any material Liabilities that would be required by GAAP to be set
forth on a consolidated balance sheet of such Subject Company and its
consolidated subsidiaries, other than Liabilities incurred after
December 31, 2005 in the ordinary course of business consistent with
past practice that would not, individually or in the aggregate,
reasonably be expected to have, with respect to such Subject Company
and its subsidiaries, a Subject Company Material Adverse Effect.
(iii) The Annual Statement for the year ended December 31, 2005,
together with all exhibits and schedules thereto, and any actuarial
opinion, affirmation or certification filed in connection therewith,
and any Quarterly Statements for periods ended after January 1, 2006,
together with all exhibits and schedules thereto, with respect to each
Subject Company or Subject Company Subsidiary that is a regulated
insurance company (an "FNF Insurance Company"),
-16-
in each case as filed with the applicable Insurance Regulator (as
hereinafter defined) in such FNF Insurance Company's domiciliary
state, were prepared in conformity with SAP and present fairly in all
material respects, to the extent required by and in conformity with
SAP, the statutory financial condition of such FNF Insurance Company
at their respective dates and the results of operations, changes in
capital and surplus and cash flow of such FNF Insurance Company for
each of the periods then ended. No deficiencies or violations material
to the financial condition or operations of any FNF Insurance Company
have been asserted in writing by any Insurance Regulator since January
1, 2004 which have not been cured or otherwise resolved to the
satisfaction of such Insurance Regulator. Except as set forth in
Section 3.1(i)(iii) of the Disclosure Schedule or in such Annual
Statement for such FNF Insurance Company, no FNF Insurance Company has
any material Liabilities that would be required by SAP to be set forth
on a consolidated balance sheet of such FNF Insurance Company and its
consolidated subsidiaries or in the notes thereto, other than
Liabilities incurred after December 31, 2005 in the ordinary course of
business consistent with past practice that would not, individually or
in the aggregate, reasonably be expected to have a Subject Company
Material Adverse Effect.
(iv) The audited unconsolidated balance sheets of FNF and the
related audited unconsolidated statements of earnings, retained
earnings and cash flows as of and for the years ended December 31,
2004 and 2005 (collectively, the "Unconsolidated FNF Financial
Statements") filed as Schedule II to the consolidated financial
statements of FNF filed with FNF's annual report on Form 10-K for the
year ended December 31, 2005, when considered in relation to such
consolidated FNF financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
Except as set forth in Section 3.1(i)(iv) of the Disclosure Schedule
or in the Unconsolidated FNF Financial Statements, FNF has no material
Liabilities that would be required by GAAP to be set forth on an
unconsolidated balance sheet of FNF or in the notes thereto, other
than Liabilities incurred (a) after December 31, 2005 in the ordinary
course of business consistent with past practice that would not,
individually or in the aggregate, reasonably be expected to have an
FNF Material Adverse Effect, or (b) in connection with this Agreement
and the FIS Merger.
(v) Except as set forth in the Subject Company Financial
Statements, the Annual Statement for each FNF Insurance Company and
the Unconsolidated FNF Financial Statements, FNF, the Subject
Companies and Subject Company Subsidiaries do not have any Liabilities
that, individually or in the aggregate, would reasonably be expected
to have an FNF Material Adverse Effect.
(j) Information Supplied. None of the information supplied or to be
supplied by FNF specifically for inclusion or incorporation by reference in
(i) the Form S-1 will at the time the Form S-1 becomes effective under the
Securities Act, at the time any amendment or supplement thereto becomes
effective under the Securities Act or at the Closing contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light
-17-
of the circumstances under which they are made, not misleading, or (ii) the
Information Statement will, at the date it is first mailed to FNT's
stockholders or at the time of the FNT Stockholders Meeting, contain any
untrue statement of a material fact or omit 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 are made, not
misleading. No representation or warranty is made by FNF in this Section
3.1(j) with respect to information supplied by FNT specifically for
inclusion or incorporation by reference in the Form S-1 or the Information
Statement.
(k) Compliance with Applicable Laws. Each of FNF, the Subject
Companies and the Subject Company Subsidiaries has in full force and effect
all Federal, state, local and foreign governmental approvals,
authorizations, certificates, consents, filings, franchises, licenses,
notices, permits and rights (collectively, "Permits") necessary for it to
own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit, except for the failure of Permits to be in full force and effect
and for defaults under Permits which failures or defaults would not,
individually or in the aggregate, reasonably be expected to have an FNF
Material Adverse Effect (in the case of FNF) or a Subject Company Material
Adverse Effect (in the case of such Subject Company and its subsidiaries).
Except as set forth in Section 3.1(k) of the Disclosure Schedule, each of
FNF, the Subject Companies and the Subject Company Subsidiaries is in
compliance with all applicable statutes, laws, ordinances, rules,
regulations and orders of any Governmental Entity to which they are
subject, except for noncompliance that would not, individually or in the
aggregate, reasonably be expected to have an FNF Material Adverse Effect
(in the case of FNF) or a Subject Company Material Adverse Effect (in the
case of such Subject Company and its subsidiaries). Except as set forth in
Section 3.1(k) of the Disclosure Schedule and except for routine
examinations by state Governmental Entities charged with supervision of
insurance companies ("Insurance Regulators"), there is no Action or
Proceeding by any Governmental Entity pending or, to the knowledge of FNF,
threatened against or with respect to FNF or any Subject Company or Subject
Company Subsidiary or the Transferred Business, other than, in each case,
those the outcome of which would not, individually or in the aggregate,
reasonably be expected to have an FNF Material Adverse Effect (in the case
of FNF) or a Subject Company Material Adverse Effect (in the case of such
Subject Company and its subsidiaries). Except as set forth in Section
3.1(k) of the Disclosure Schedule, none of FNF, the Subject Companies and
the Subject Company Subsidiaries is a party to any agreement, commitment or
understanding, written or oral, with any Insurance Regulator, except for
routine agreements, commitments and understandings with such Insurance
Regulators which would not, individually or in the aggregate, reasonably be
expected to be material to the business of the FNF Insurance Companies
taken as a whole.
(l) Litigation. Except as set forth in Section 3.1(l) of the
Disclosure Schedule or for matters that, as of the date of this Agreement,
are subject to indemnification by FNT in favor of FNF, there is no material
Action or Proceeding pending or, to the knowledge of FNF, threatened
against or affecting FNF, any Subject Company, any Subject Company
Subsidiary or the Transferred Business or seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, nor
is there
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any material judgment, decree, injunction or order of any Governmental
Entity outstanding against FNF, any of the Subject Companies, any of the
Subject Company Subsidiaries or any Other Assets. For purposes of this
Section 3.1(l), the term "material" shall have the meaning specified in
Section 3.1(l) of the Disclosure Schedule.
(m) Brokers. No broker, investment banker, financial advisor or other
Person, other than Bear, ▇▇▇▇▇▇▇ & Co. Inc., the fees and expenses of which
will be paid by FNF, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Asset
Contribution, the Spin-off, the FIS Merger, or the other transactions
contemplated by this Agreement, based upon arrangements made by or on
behalf of FNF.
(n) Opinion of Financial Advisor. FNF has received the opinion of its
financial advisor, Bear, ▇▇▇▇▇▇▇ & Co. Inc., to the effect that, as of the
date of this Agreement, the consideration to be received by FNF and its
stockholders pursuant to this Agreement and the FIS Merger Agreement, taken
together, is fair, from a financial point of view, to the stockholders of
FNF.
(o) Other Assets. FNF has good and marketable title to or a valid
leasehold or license interest in all of the Other Assets, free and clear of
all Liens other than Permitted Liens. Assuming FNT has the requisite power
and authority to be the lawful owner, lessee or licensee of the Other
Assets, upon the consummation of the transactions contemplated by this
Agreement, good and marketable title to or a valid leasehold or license
interest in the Other Assets will pass to FNT, free and clear of all Liens
other than Permitted Liens.
(p) No Guaranty of FIS Obligations. The Subject Companies and the
Subject Company Subsidiaries have not guaranteed any material obligations
of FIS, any FIS Subsidiary or National Title Insurance of New York, Inc.
(q) Environmental Matters. Except as set forth in Section 3.1(q) of
the Disclosure Schedule:
(i) FNF, the Subject Companies and Subject Company Subsidiaries
are in compliance with all applicable Environmental Laws, except where
failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have an FNF Material Adverse
Effect (in the case of FNF) or a Subject Company Material Adverse
Effect (in the case of such Subject Company and its subsidiaries);
(ii) Since the date that is three years prior to the date of this
Agreement or, in the case of any Subject Company or Subject Company
Subsidiary in which FNF acquired its interest at a later date, such
later date, none of FNF, the Subject Companies or the Subject Company
Subsidiaries has received any material Environmental Claim concerning
compliance with, or liability under, any Environmental Law with
respect to any real property now or formerly owned,
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leased or operated by FNF, the Subject Companies and Subject Company
Subsidiaries;
(iii) FNF, the Subject Companies and Subject Company Subsidiaries
have all material Permits required under applicable Environmental Laws
for the conduct of their respective businesses, as presently
conducted, and FNF, the Subject Companies and Subject Company
Subsidiaries are in material compliance with all such Permits;
(iv) None of FNF, the Subject Companies and Subject Company
Subsidiaries is party to, or subject to the terms of, any material
order that imposes any future Liability under any Environmental Law in
connection with its respective businesses; and
(v) To FNF's knowledge after due inquiry, there have been no
releases of Hazardous Materials at, on, under or from any real
property now or formerly owned, leased or operated by FNF, the Subject
Companies and Subject Company Subsidiaries that would be reasonably
likely to result in material Liabilities or obligations under
Environmental Law.
(r) FIS Merger Agreement. FNF has delivered or made available to FNT a
complete and correct copy of the FIS Merger Agreement.
SECTION 3.2. Representations and Warranties of FNT. FNT represents and
warrants to FNF as follows:
(a) Organization, Standing and Corporate Power. Each of FNT and each
FNT Subsidiary (as hereinafter defined) is a corporation, limited liability
company or other legal entity duly organized, validly existing and in good
standing (in such jurisdictions where such concept is applicable) under the
laws of the jurisdiction of its organization and has the requisite
corporate, limited liability company or other entity power and authority to
carry on its business as now being conducted. Each of FNT and each FNT
Subsidiary is duly qualified to do business and is in good standing (in
such jurisdictions where such concept is applicable) in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified (individually or in the
aggregate) would not have an FNT Material Adverse Effect (as hereinafter
defined). For purposes of this Agreement, (i) an "FNT Subsidiary" means a
subsidiary of FNT, and (ii) an "FNT Material Adverse Effect" means (x) any
event, circumstance or change that, individually or in the aggregate, is or
would reasonably be likely to be materially adverse to the assets,
Liabilities, business, condition (financial or otherwise) or results of
operations of FNT and the FNT Subsidiaries taken as a whole, other than any
such event, circumstance or change to the extent resulting from (A) changes
in general economic conditions affecting the United States occurring after
the date hereof, (B) general changes or developments in the industry in
which FNT and the FNT Subsidiaries operate occurring after the date hereof,
(C) changes in laws or regulations occurring after the date hereof or (D)
the announcement of this Agreement and the transactions contemplated
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hereby, including any termination of, reduction in or similar negative
impact on the relationships, contractual or otherwise, with any customers,
distributors, partners or employees of FNT and the FNT Subsidiaries to the
extent due to the announcement of this Agreement or the identity of the
parties hereto, unless, in the case of the foregoing clause (A) or (B),
such changes referred to therein have a materially disproportionate effect
on FNT and the FNT Subsidiaries taken as a whole relative to other
participants in the industry in which FNT and the FNT Subsidiaries operate,
or (y) any material adverse effect on the ability of FNT to perform its
obligations hereunder or to consummate the transactions contemplated hereby
on a timely basis. True and complete copies of the Organizational Documents
of FNT and each FNT Subsidiary as in effect on the date hereof have been
heretofore made available to FNF.
(b) Capital Structure.
(i) The authorized capital stock of FNT consists of (x)
300,000,000 shares of FNT Class A Common Stock and 300,000,000 shares
of FNT Class B Common Stock, and (y) 50,000,000 shares of preferred
stock, par value $0.0001 per share ("FNT Preferred Stock"). 31,147,357
shares of FNT Class A Common Stock, 143,176,041 shares of FNT Class B
Common Stock and no shares of FNT Preferred Stock are issued and
outstanding. 6,695shares of FNT Class A Common Stock and no shares of
FNT Class B Common Stock are held by FNT Subsidiaries or by FNT in its
treasury. 3,024,000 shares of FNT Class A Common Stock are reserved
for issuance pursuant to outstanding options to purchase shares of FNT
Common Stock granted under the FNT Stock Plan. Except as set forth
above, no shares of capital stock or other equity securities of FNT
are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of FNT are, and the FNT Shares and any shares
issued upon the exercise of options under the FNT Stock Plan will be,
when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. No bonds,
debentures, notes or other indebtedness of FNT having the right to
vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which the stockholders of FNT may
vote are issued or outstanding. Except as set forth above, there are
not any securities, preemptive rights, options, warrants, rights,
commitments or agreements of any kind to which FNT is a party or by
which any of them is bound obligating any of them to issue, sell or
deliver, or repurchase, redeem or otherwise acquire, shares of capital
stock or other equity or voting securities of FNT, or obligating FNT
to issue, sell, deliver, grant, extend or enter into any such
security, option, warrant, right, commitment or agreement. Except as
set forth in Section 3.2(b)(i) of the Disclosure Schedule, FNT is not
a party to or bound by any agreement, proxy, voting trust or other
arrangement restricting the transfer of FNT Common Stock or affecting
the voting of any shares of capital stock of FNT.
(ii) Section 3.2(b)(ii) of the Disclosure Schedule lists each FNT
Subsidiary. Except as set forth in Section 3.2(b)(ii) of the
Disclosure Schedule, all of the outstanding shares of capital stock or
other equity securities of each FNT Subsidiary have been validly
issued and are fully paid and non-assessable (in
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the case of any FNT Subsidiary that is not organized in the United
States, to the extent such concepts are applicable) and are owned by
FNT, free and clear of all Liens. No bonds, debentures, notes or other
indebtedness of any FNT Subsidiary having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of any FNT Subsidiary
may vote are issued or outstanding. Except as set forth in Section
3.2(b)(ii) of the Disclosure Schedule, there are no securities,
preemptive rights, options, warrants, rights, commitments or
agreements of any kind to which FNT or any FNT Subsidiary is a party
or by which any of them is bound obligating any of them to issue, sell
or deliver, or repurchase, redeem or otherwise acquire, shares of
capital stock or other equity or voting securities of any FNT
Subsidiary, or obligating any of them to issue, sell, deliver, grant,
extend or enter into any such security, option, warrant, right,
commitment or agreement. Except as set forth in Section 3.2(b)(ii) of
the Disclosure Schedule, neither FNT nor any FNT Subsidiary is a party
to or bound by any agreement, proxy, voting trust or other arrangement
restricting the transfer or affecting the voting of any shares of
capital stock of any FNT Subsidiary. Except for the capital stock or
other equity securities of such subsidiaries and the other ownership
interests listed in Section 3.2(b)(ii) of the Disclosure Schedule, FNT
does not own, directly or indirectly, any capital stock or other
ownership interest in any Person other than interests held for
investment purposes that do not exceed 10% of the voting securities of
any such single Person. Except as set forth in Section 3.2(b)(ii) of
the Disclosure Schedule or for investment portfolio activities of any
FNT Insurance Company, none of FNT or the FNT Subsidiaries is subject
to any obligation or requirement and has not entered into any
agreement to make any investment (in the form of a capital
contribution, loan or otherwise) in any Person.
(c) Authority; Noncontravention. FNT has all requisite corporate power
and authority to enter into this Agreement and, subject to the approval of
its stockholders as set forth in Section 5.4 (the "FNT Stockholder
Approval"), FNT and each of the FNT Subsidiaries have all requisite
corporate power and authority to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by FNT and
the consummation by FNT of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of
FNT, subject to the FNT Stockholder Approval. This Agreement has been duly
executed and delivered by and, assuming this Agreement constitutes the
valid and binding agreement of FNF, constitutes a valid and binding
obligation of FNT, enforceable against FNT in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to the
effect of general principles of equity. Except as set forth in Section
3.2(c) of the Disclosure Schedule, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will
not, (x) conflict with any of the provisions of the Organizational
Documents of FNT or of any FNT Subsidiary, (y) subject to the matters
referred to in the next sentence, conflict with, result in a breach of or
default (with or without notice or lapse of time, or both) under, give rise
to a right of termination, cancellation or
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acceleration of any obligation or loss of a material benefit under, require
the consent of any Person under, or result in the creation of any Lien on
any property or asset of FNT or any FNT Subsidiary under, any indenture or
other agreement, permit, franchise, license or other instrument or
undertaking to which FNT or any of the FNT Subsidiaries is a party or by
which FNT or any of the FNT Subsidiaries or any of their assets is bound or
affected, or (z) subject to the matters referred to in the next sentence,
contravene any statute, law, ordinance, rule, regulation, order, judgment,
injunction, decree, determination or award applicable to FNT or any of the
FNT Subsidiaries or any of their respective properties or assets, which, in
the case of clauses (y) and (z) above, individually or in the aggregate,
would reasonably be expected to have an FNT Material Adverse Effect. No
consent, approval or authorization of, or declaration or filing with, or
notice to, any Governmental Entity is required by or with respect to FNT or
any of the FNT Subsidiaries in connection with the execution and delivery
of this Agreement by FNT or the consummation by FNT or any FNT Subsidiary,
as the case may be, of any of the transactions contemplated by this
Agreement, except for (i) the approvals, filings or notices required under
the insurance laws of the jurisdictions set forth in Section 3.2(c) of the
Disclosure Schedule, (ii) the filing with the SEC of such reports and other
filings under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) the
filing with the SEC of the Form S-1, the Form S-8 and the Information
Statement, (iv) such other consents, approvals, authorizations, filings or
notices as are set forth in Section 3.2(c) of the Disclosure Schedule and
(v) such other consents, approvals, authorizations, declarations, filings
or notices the failure to obtain or make which, in the aggregate, would not
have an FNT Material Adverse Effect.
(d) Absence of Certain Changes or Events. Except as set forth in the
FNT SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed FNT SEC Documents") or in Section 3.2(d) of the
Disclosure Schedule or in connection with the transactions contemplated
hereby, since December 31, 2005, each of FNT and the FNT Subsidiaries has
conducted its business only in the ordinary course consistent with past
practice, and there has not been (i) any change, circumstance, effect,
event, development or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have an FNT Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of FNT's outstanding capital stock (other than ordinary quarterly cash
dividends), (iii) any split, combination or reclassification of any of its
outstanding capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, (iv) (x) any
granting by FNT or any of the FNT Subsidiaries to any Executive Officer of
FNT or such FNT Subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of December 31, 2005, (y)
any granting by FNT or any of the FNT Subsidiaries to any such Executive
Officer of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in
effect as of December 31, 2005 or (z) any entry by FNT or any FNT
Subsidiary into any employment, severance or termination agreement with any
such Executive Officer or other employee or (v) any change in accounting
methods, principles
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or practices by FNT or any of the FNT Subsidiaries materially affecting its
assets, liabilities or business, including any change with respect to the
establishment of reserves for unearned premiums, losses and loss adjustment
expenses, except insofar as may have been required by a change in GAAP or
SAP.
(e) Absence of Changes in FNT Benefit Plans. Except as set forth in
the Filed FNT SEC Documents or in Section 3.2(e) of the Disclosure
Schedule, since December 31, 2005, there has not been any adoption or
material amendment by FNT or any FNT Subsidiary of any collective
bargaining agreement or any FNT Benefit Plan (as defined in Section
3.2(f)).
(f) FNT Benefit Plans. (i) Each Pension Plan, Welfare Plan, and each
other plan, arrangement or policy (written or oral) relating to
compensation, deferred compensation, severance, fringe benefits or other
employee benefits, in each case maintained or contributed to, or required
to be maintained or contributed to, by FNT or any FNT Subsidiary for the
benefit of any present or former officer, employee, agent, director or
independent contractor of FNT or any FNT Subsidiary (all the foregoing
being herein called "FNT Benefit Plans") has been established, funded,
maintained and administered in all material respects in accordance with its
terms and in compliance in all material respects with the applicable
provisions of ERISA, the Code, all other applicable laws and all applicable
collective bargaining agreements.
(ii) None of FNT, the FNT Subsidiaries or any other Person or
entity that together with FNT is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each a "FNT Commonly
Controlled Entity") has incurred any material Liability under Title IV
of ERISA (other than for the payment of benefits or Pension Benefit
Guaranty Corporation insurance premiums, in either case in the
ordinary course).
(iii) No FNT Commonly Controlled Entity is obligated to
contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from or incurred any contractual
Liability to any multiemployer plan resulting or which would
reasonably be expected to result in any material "withdrawal
liability" (within the meaning of Section 4201 of ERISA) that has not
been fully paid.
(iv) There are no material Actions or Proceedings pending with
respect to any FNT Benefit Plans, other than routine benefit claims,
qualified domestic relations orders (as defined in Section 206(d) of
ERISA) and qualified medical child support orders (as defined in
Section 609 of ERISA) and, to FNT's knowledge, no such material
Actions or Proceedings are threatened.
(g) Taxes. (i) Each of FNT and the FNT Subsidiaries has timely filed
(taking into account all available extensions) all material tax returns and
material reports required to be filed by it or requests for extensions to
file such returns or reports have been timely filed, granted and have not
expired. All tax returns filed by FNT and the FNT Subsidiaries are complete
and accurate in all material respects. FNT and each of the FNT
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Subsidiaries have paid (or FNT has paid on the FNT Subsidiaries' behalf)
all taxes shown as due on such returns, and the most recent audited
consolidated and combined financial statements contained in the Filed FNT
SEC Documents reflect an adequate reserve for all taxes payable by FNT and
the FNT Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted
or assessed against FNT or any FNT Subsidiary that are not adequately
reserved for, except for deficiencies that, individually or in the
aggregate, would not have an FNT Material Adverse Effect, and no
requests for waivers of the time to assess any such taxes have been
granted or are pending. The Federal and state income tax returns of
FNT and each FNT Subsidiary consolidated in such returns have been
examined by and settled with the United States Internal Revenue
Service or the appropriate state taxation authorities, as the case may
be, or the statute of limitations on assessment or collection of any
Federal or state income taxes due from FNT or any of its subsidiaries
has expired, for all taxable years of FNT or any of the FNT
Subsidiaries through the taxable year ended December 31, (a) 2001, for
Federal income tax purposes and December 31, (b) 1999, for state
income tax purposes.
(h) No Excess Parachute Payments; Section 162(m) of the Code. (i)
Except as set forth in Section 3.2(h) of the Disclosure Schedule, none of
the transactions contemplated by this Agreement shall constitute a
triggering event under any employment, severance or termination agreement
or other compensation arrangement or FNT Benefit Plan currently in effect
which (either alone or upon the occurrence of any additional or subsequent
event) would reasonably be expected to result in any payment, acceleration,
vesting or increase in benefits to any current or former officer, employee
or director of FNT or any of its subsidiaries and which would constitute an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(ii) Except as set forth in Section 3.2(h) of the Disclosure
Schedule or as would not, individually or in the aggregate, reasonably
be expected to have an FNT Material Adverse Effect, the disallowance
of a deduction under Section 162(m) of the Code for employee
remuneration will not apply to any amount paid or payable by FNT or
any FNT Subsidiary under any contract, FNT Benefit Plan, program,
arrangement or understanding currently in effect.
(i) SEC Documents; Financial Statements.
(i) FNT has filed all reports, schedules, forms, statements and
other documents required to be filed with the SEC since October 1,
2005 (the "FNT SEC Documents"). As of their respective dates, the FNT
SEC Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such FNT SEC Documents, and none of the FNT SEC Documents as of such
dates contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
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necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to
the extent that information contained in any FNT SEC Document has been
revised or superseded by a later Filed FNT SEC Document (as defined in
Section 3.2(d)), none of the FNT SEC Documents contains any untrue
statement of a material fact or omits 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.
(ii) The consolidated and combined financial statements of FNT
included in the FNT SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited
consolidated and combined quarterly statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present
fairly, in all material respects, the consolidated and combined
financial position of FNT and its subsidiaries as of the dates thereof
and the consolidated and combined results of their operations and
their cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end adjustments).
Except as set forth in the Filed FNT SEC Documents or in Section
3.2(i)(ii) of the Disclosure Schedule, neither FNT nor any FNT
Subsidiary has any material Liabilities that would be required by GAAP
to be set forth on a consolidated balance sheet of FNT and its
consolidated subsidiaries or in the notes thereto, other than
Liabilities incurred (a) after December 31, 2005 in the ordinary
course of business consistent with past practice that would not,
individually or in the aggregate, reasonably be expected to have an
FNT Material Adverse Effect or (b) in connection with this Agreement
and the FIS Merger.
(iii) The Annual Statement for the year ended December 31, 2005,
together with all exhibits and schedules thereto, and any actuarial
opinion, affirmation or certification filed in connection therewith,
and any Quarterly Statements for periods ended after January 1, 2006,
together with all exhibits and schedules thereto, with respect to each
FNT Subsidiary that is a regulated insurance company (an "FNT
Insurance Company"), in each case as filed with the applicable
Insurance Regulator, were prepared in conformity with SAP and present
fairly in all material respects, to the extent required by and in
conformity with SAP, the statutory financial condition of such FNT
Insurance Company at their respective dates and the results of
operations, changes in capital and surplus and cash flow of such FNT
Insurance Company for each of the periods then ended. No deficiencies
or violations material to the financial condition or operations of any
FNT Insurance Company have been asserted in writing by any Insurance
Regulator since January 1, 2004 which have not been cured or otherwise
resolved to the satisfaction of such Insurance Regulator. Except as
set forth in such Annual Statement for such FNT Insurance Company, no
FNT Insurance Company has any material Liabilities that would be
required by SAP to be set forth on a consolidated balance sheet of
such FNT Insurance Company and its
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consolidated subsidiaries or in the notes thereto, other than
Liabilities incurred after December 31, 2005 in the ordinary course of
business consistent with past practice that would not, individually or
in the aggregate, reasonably be expected to have an FNT Material
Adverse Effect.
(j) Information Supplied. The Form S-1 and the Information Statement
will comply as to form in all material respects with the respective
requirements of the Securities Act and the Exchange Act and the respective
rules and regulations promulgated thereunder. None of the information
supplied or to be supplied by FNT specifically for inclusion or
incorporation by reference in (i) the Form S-1 will, at the time the Form
S-1 becomes effective under the Securities Act, at the time any amendment
or supplement thereto becomes effective under the Securities Act, at the
time of the meeting of the FNF stockholders to be held for the purpose of
approving the FIS Merger or at the Closing contain any untrue statement of
a material fact or omit 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 are made, not misleading, or (ii) the
Information Statement will, at the date it is first mailed to FNT's
stockholders or at the time of the FNT Stockholders Meeting, contain any
untrue statement of a material fact or omit 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 are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made by FNT in this Section 3.2(j) with respect to information supplied by
FNF specifically for inclusion or incorporation by reference in the Form
S-1 or the Information Statement.
(k) Compliance with Applicable Laws. Each of FNT and the FNT
Subsidiaries has in full force and effect all Permits necessary for it to
own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit, except for the failure of Permits to be in full force and effect
and for defaults under Permits which failures or defaults would not,
individually or in the aggregate, reasonably be expected to have an FNT
Material Adverse Effect. Except as set forth in the Filed FNT SEC
Documents, FNT and the FNT Subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, regulations and orders of any
Governmental Entity to which they are subject, except for noncompliance
that would not, individually or in the aggregate, reasonably be expected to
have an FNT Material Adverse Effect. Except as set forth in the Filed FNT
SEC Documents and except for routine examinations by any Insurance
Regulator, there is no Action or Proceeding by any Governmental Entity
pending or, to the knowledge of FNT, threatened against or with respect to
FNT or any FNT Subsidiary, other than, in each case, those the outcome of
which would not, individually or in the aggregate, reasonably be expected
to have an FNT Material Adverse Effect. Except as set forth in Section
3.2(k) of the Disclosure Schedule, neither FNT nor any FNT Subsidiary is a
party to any agreement, commitment or understanding, written or oral, with
any Insurance Regulator, except for routine agreements, commitments and
understandings with such Insurance Regulators which would not, individually
or in the aggregate, reasonably be expected to have an FNT Material Adverse
Effect.
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(l) Litigation. Except as set forth in Section 3.2(l) of the
Disclosure Schedule, there is no material Action or Proceeding pending or,
to the knowledge of FNT, threatened against or affecting FNT or any of the
FNT Subsidiaries or seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any material
judgment, decree, injunction or order of any Governmental Entity
outstanding against FNT or any of the FNT Subsidiaries. For purposes of
this Section 3.2(l), the term "material" shall have the meaning specified
in Section 3.2(l) of the Disclosure Schedule.
(m) Brokers. No broker, investment banker, financial advisor or other
Person, other than Banc of America Securities LLC, the fees and expenses of
which will be paid by FNT, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Asset
Contribution, the Spin-off, or the other transactions contemplated by this
Agreement, based upon arrangements made by or on behalf of FNT.
(n) Opinion of Financial Advisor. The special committee of the board
of directors of FNT has received the opinion of its financial advisor, Banc
of America Securities LLC, to the effect that, as of the date of such
opinion, the aggregate number of FNT Shares to be issued by FNT to FNF
pursuant to this Agreement in exchange for the Subject Securities and the
Other Assets is fair, from a financial point of view, to FNT.
(o) Voting Requirements. The affirmative vote of the holders of at
least a majority of the outstanding shares of FNT Common Stock entitled to
vote at the FNT Stockholders Meeting, voting as a single class, is the only
vote of the holders of any class or series of FNT's capital stock necessary
to approve this Agreement and the transactions contemplated by this
Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Conduct of Business.
(a) Conduct of Business by the Subject Companies. Except as
specifically contemplated by this Agreement or as required by applicable
law or as set forth on Section 4.1(a) of the Disclosure Schedule, during
the period from the date of this Agreement to the Closing, FNF shall cause
each of the Subject Companies and the Subject Company Subsidiaries to carry
on its business only in the ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, use
all reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and
employees and preserve its relationships with any Governmental Entities,
customers, suppliers, distributors, creditors, lessors, agents, insureds,
reinsureds and others having business dealings with it to the end that its
goodwill and ongoing businesses shall be unimpaired at the Closing. Without
limiting the generality of the foregoing, during the period from the date
of this Agreement to the
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Closing, except as set forth on Section 4.1(a) of the Disclosure Schedule
or as otherwise expressly required by or provided for in this Agreement,
FNF shall not permit any Subject Company or Subject Company Subsidiary to,
without the prior consent of FNT, which shall not be unreasonably withheld
or delayed:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of such Subject Company's or Subject Company Subsidiary's
outstanding capital stock or other equity securities, (y) split,
combine or reclassify any of its outstanding capital stock or other
equity securities or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its outstanding capital stock or other equity securities, or (z)
purchase, redeem or otherwise acquire any shares of outstanding
capital stock or other equity securities or any rights, warrants or
options to acquire any such shares or other equity securities;
(ii) issue, sell, grant, pledge or otherwise encumber any shares
of its capital stock or other equity securities, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares or other equity securities,
voting securities or convertible securities other than upon the
exercise of options or warrants issued by it and outstanding on the
date of this Agreement;
(iii) acquire, in any transaction or a series of related
transactions, by merger or otherwise, (x) any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or substantially all of the assets of
any of the foregoing, or (y) any assets that are material,
individually or in the aggregate, to the Subject Companies and the
Subject Company Subsidiaries taken as a whole, except purchases of
investment assets in the ordinary course of business consistent with
past practice, except in each case for such transactions among Subject
Companies and any Subject Company Subsidiaries;
(iv) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets that are material to any Subject Company and its subsidiaries
taken as a whole, except in the ordinary course of business consistent
with past practice;
(v) amend or propose any change to its Organizational Documents;
(vi) (x) incur any indebtedness for borrowed money or guarantee
or otherwise become responsible for any such indebtedness of another
Person, other than indebtedness in an amount less than $5,000,000
individually or $15,000,000 in the aggregate, other than in the
ordinary course of business consistent with past practice and other
than indebtedness owing to or guarantees of indebtedness owing to such
Subject Company or any direct or indirect wholly-owned subsidiary of
such Subject Company (it being understood that such Subject
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Company's guarantee of the performance of a Subject Company Subsidiary
to a third party customer or vendor shall not constitute an incurrence
of indebtedness under this subsection), or (y) make any material
loans, advances or capital contributions to, or investments in, any
other Person, other than to such Subject Company or to any direct or
indirect wholly-owned subsidiary of such Subject Company and routine,
immaterial advances to employees and other than purchases of
investment assets in the ordinary course of business consistent with
past practice;
(vii) except in accordance with such Subject Company's or Subject
Company Subsidiary's budget as of the date hereof, make or agree to
make any new capital expenditure or expenditures which, individually,
involves payments of in excess of $5,000,000 or, in the aggregate,
involve payments of in excess of $15,000,000;
(viii) make any tax election or settle or compromise any income
tax Liability that, individually or in the aggregate, would reasonably
be expected to have an FNF Material Adverse Effect;
(ix) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the Subject Company Financial
Statements as at and for the year ended December 31, 2005 or incurred
since December 31, 2005 in the ordinary course of business consistent
with past practice, or in amounts not in excess of $5,000,000 in each
case;
(x) settle or compromise any action, suit or other litigation or
claim arising out of the transactions contemplated hereby;
(xi) make any change in accounting and, in the case of any FNF
Insurance Company, underwriting or actuarial methods, principles or
practices used by such Subject Company or Subject Company Subsidiary
materially affecting its assets, liabilities or business, including
any change with respect to establishment of reserves for unearned
premiums, losses and loss adjustment expenses, except insofar as may
be required by law or by a change in applicable accounting principles;
(xii) other than in the ordinary course of business consistent
with past practice, cancel, modify or waive any material debts or
claims held by it or waive any material rights under any material
contract to which such Subject Company or Subject Company Subsidiary
is a party; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
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(b) Conduct of Business by FNF. Except as specifically contemplated by
this Agreement or as required by applicable law or as set forth on Section
4.1(b) of the Disclosure Schedule, during the period from the date of this
Agreement to the Closing, FNF shall carry on its business only in the
ordinary and usual course of business consistent with past practice.
Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Closing, except as set forth on Section
4.1(b) of the Disclosure Schedule or as otherwise expressly required by or
provided for in this Agreement, FNF shall not, without the prior consent of
FNT, which shall not be unreasonably withheld or delayed:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of its outstanding capital stock or other equity securities,
other than ordinary quarterly cash dividends consistent with past
practice, or (y) except as required by the terms of any agreement,
arrangement or plan in effect as of the date hereof, purchase, redeem
or otherwise acquire any shares of outstanding capital stock or other
equity securities or any rights, warrants or options to acquire any
such shares or other equity securities;
(ii) acquire, in any transaction or a series of related
transactions, by merger or otherwise, (x) any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or substantially all of the assets of
any of the foregoing, or (y) any assets the acquisition of which would
result in a material change in the Other Assets;
(iii) make any tax election or settle or compromise any income
tax Liability that, individually or in the aggregate, would reasonably
be expected to have an FNF Material Adverse Effect;
(iv) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the balance sheet as of December 31,
2005 included in the Unconsolidated FNF Financial Statements or
incurred since December 31, 2005 in the ordinary course of business
consistent with past practice, or in amounts not in excess of
$10,000,000 in each case;
(v) settle or compromise any action, suit or other litigation or
claim arising out of the transactions contemplated hereby;
(vi) acquire any equity securities issued by FIS;
(vii) acquire any equity securities issued by FNT;
(viii) loan or contribute funds to, or acquire any shares of
capital stock of, National Title Insurance of New York, Inc.;
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(ix) other than in the ordinary course of business consistent
with past practice, cancel, modify or waive any material debts or
claims held by it or waive any material rights under any material
contract to which FNF is a party; or
(x) authorize any of, or commit or agree to take any of, the
foregoing actions.
(c) Conduct of Business by FNT. Except as specifically contemplated by
this Agreement or as required by applicable law or as set forth on Section
4.1(c) of the Disclosure Schedule, during the period from the date of this
Agreement to the Closing, FNT shall, and shall cause the FNT Subsidiaries
to, carry on its and their respective businesses only in the ordinary and
usual course of business consistent with past practice and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its and
their respective current business organizations, keep available the
services of its and their current officers and employees and preserve its
and their relationships with Governmental Entities, customers, suppliers,
distributors, creditors, lessors, agents, insureds, reinsureds and others
having business dealings with it and them to the end that its and their
goodwill and ongoing businesses shall be unimpaired at the Closing. Without
limiting the generality of the foregoing, during the period from the date
of this Agreement to the Closing, except as set forth on Section 4.1(c) of
the Disclosure Schedule or as otherwise expressly required by or provided
for in this Agreement, FNT shall not, and shall not permit any of the FNT
Subsidiaries to, without the prior consent of FNF, which shall not be
unreasonably withheld or delayed:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any outstanding capital stock or other equity securities of FNT or
such FNT Subsidiary, other than ordinary quarterly cash dividends
consistent with past practice, (y) split, combine or reclassify any of
its outstanding capital stock or other equity securities or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its outstanding capital stock or
other equity securities or (z) purchase, redeem or otherwise acquire
any shares of outstanding capital stock or other equity securities or
any rights, warrants or options to acquire any such shares or other
equity securities;
(ii) issue, sell, grant, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities, other than
upon the exercise of options outstanding under the FNT Stock Plan on
the date of this Agreement;
(iii) acquire, in any transaction or a series of related
transactions, by merger or otherwise, (x) any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof, or substantially all of the assets
of any of the foregoing, or (y) any assets that are material,
individually or in the aggregate, to FNT or any FNT Subsidiary, except
purchases of investment assets in the ordinary course of business
consistent with
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past practice, except, in each case, for such transactions among FNT
and any FNT Subsidiary or between FNT Subsidiaries;
(iv) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets that are material to FNT or any FNT Subsidiary, except in the
ordinary course of business consistent with past practice;
(v) amend or propose any change to its Organizational Documents;
(vi) (x) incur any indebtedness for borrowed money or guarantee
or otherwise become responsible for any such indebtedness of another
Person, other than indebtedness in an amount less than $25,000,000
individually or $50,000,000 in the aggregate, other than in the
ordinary course of business consistent with past practice and other
than indebtedness owing to or guarantees owing to FNT or any direct or
indirect wholly-owned subsidiary of FNT (it being understood that
FNT's guarantee of the performance of an FNT Subsidiary to a third
party customer or vendor shall not constitute an incurrence of
indebtedness under this subsection) or (y) make any material loans,
advances or capital contributions to, or investments in, any other
Person, other than to FNT or to any direct or indirect wholly-owned
subsidiary of FNT and routine, immaterial advances to employees and
other than purchases of investment assets in the ordinary course of
business consistent with past practice;
(vii) except in accordance with FNT's or such FNT Subsidiary's
budget as of the date hereof, make or agree to make any new capital
expenditure or expenditures which, individually, involves payments of
in excess of $10,000,000 or, in the aggregate, involve payments of in
excess of $25,000,000 or has not, prior to the date hereof, been
budgeted by FNT or such FNT Subsidiary and approved by its board of
directors;
(viii) make any tax election or settle or compromise any income
tax Liability that, individually or in the aggregate, would reasonably
be expected to have an FNT Material Adverse Effect, except in the
ordinary course of business consistent with past practice;
(ix) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the audited consolidated and combined
financial statements (or the notes thereto) of FNT as at and for the
year ended December 31, 2005 or incurred since December 31, 2005 in
the ordinary course of business consistent with past practice, or in
amounts not in excess of $10,000,000 in each case;
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(x) settle or compromise any action, suit or other litigation or
claim arising out of the transactions contemplated hereby;
(xi) make any change in accounting, underwriting or actuarial
methods, principles or practices used by FNT or any of the FNT
Subsidiaries materially affecting its assets, liabilities or business,
including any change with respect to establishment of reserves for
unearned premiums, losses and loss adjustment expenses, except insofar
as may be required by law or by a change in applicable accounting
principles;
(xii) other than in the ordinary course of business consistent
with past practice, cancel, modify or waive any material debts or
claims held by it or waive any material rights under any material
contract to which FNT or any FNT Subsidiary is a party; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 4.2. Advice of Changes. During the period from the date of
this Agreement until the Closing, FNF shall give prompt notice to FNT, and FNT
shall give prompt notice to FNF, of any event, condition or circumstance of
which it becomes aware that would constitute a violation or breach of this
Agreement by it; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Preparation of Form S-1 and the Information Statement;
Preparation of Form S-8.
(a) As soon as practicable following the date of this Agreement, FNT
shall prepare, in consultation with FNF, and file with the SEC the Form S-1
(if necessary) and the Information Statement. FNT shall use its reasonable
best efforts to respond promptly after consultation with FNF to any
comments of the SEC or its staff and to have the Form S-1 declared
effective under the Securities Act as promptly as practicable after such
filing. FNT shall use its reasonable best efforts to cause the Information
Statement to be mailed to FNT's stockholders as promptly as practicable.
FNT shall also take, in consultation with FNF, any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified) required to be taken under any applicable state securities laws
in connection with the issuance of the FNT Shares, the Spin-off, the
issuance of the Replacement Options and Replacement Restricted Shares (as
defined herein) and the adoption of the FNT Stock Plan Amendment. FNT shall
not mail or use the Information Statement or any amendment or supplement
thereto or any prospectus included in the Form S-1 or any amendment or
supplement thereto without the prior approval of FNF of
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the form and content thereof, which approval will not be unreasonably
withheld or delayed.
(b) As soon as practicable following the completion of the Spin-off,
FNT shall prepare, in consultation with FNF, and file with the SEC the Form
S-8.
SECTION 5.2. Treatment of FNF Equity Awards. In connection with the
Spin-off, each of FNF and FNT shall cooperate and take all actions necessary,
including seeking requisite stockholder approval, if necessary, to provide that
outstanding equity awards held by employees and directors of FNF who after the
Spin-off will be employed by or serve as a director of FNT or any FNT Subsidiary
(the "FNT Service Providers") will be treated as follows:
(a) Options. As of the effective time of the Spin-off, each
outstanding option to purchase shares of FNF common stock (an "FNF Option")
held by an FNT Service Provider will be replaced with an option to purchase
shares of FNT Class A Common Stock (a "Replacement Option") granted under
the FNT Stock Plan. Each Replacement Option shall be exercisable for a
number of shares of FNT Class A Common Stock calculated by multiplying the
number of shares of FNF common stock subject to such FNF Option as of the
effective time of the Spin-off by the Option Exchange Number, rounding down
to the nearest whole number. The "Option Exchange Number" shall equal the
closing price of a share of FNF common stock on the business day
immediately preceding the date that the Spin-off is consummated divided by
the closing price of a share of FNT Class A Common Stock on the date that
the Spin-off is consummated (or, if the Spin-off is consummated after the
close of trading on the NYSE on such date, on the next business day
following such date), rounded to the nearest ten thousandth. The exercise
price for each share of FNT Class A Common Stock under a Replacement Option
shall be calculated by dividing the exercise price for one share of FNF
common stock under the related FNF Option as of the effective time of the
Spin-off by the Option Exchange Number, rounding up to the nearest whole
cent. No vesting schedule for any Replacement Option shall be modified as a
result of the transaction contemplated hereby. Notwithstanding the
foregoing, 50% of all FNF Options held as of the effective time of the
Spin-off by any Dual Service Provider (other than the FNF Options that are
subject to the Option Letter Agreement) will be replaced with Replacement
Options, and the remaining 50% of the FNF Options (other than the FNF
Options that are subject to the Option Letter Agreement) held by such Dual
Service Provider will be assumed by FIS pursuant to the FIS Merger
Agreement. The replacement of FNF Stock Options pursuant to this Section
5.2(a) shall in all circumstances satisfy Section 1.409A-1(b)(5)(v)(D) of
the Proposed Regulations under Section 409A of the Code or any future
guidance promulgated or issued thereunder.
(b) Restricted Stock.
(i) Each holder as of the Record Date of a share of FNF common
stock which when issued was subject to forfeiture under an FNF stock
plan and which remains subject to forfeiture as of the effective time
of the Spin-off (an "FNF Restricted Share"), shall receive the
Spin-off dividend pursuant to Section 5.15; provided, however, that
such Spin-off dividend shall be subject to the same
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terms, conditions and restrictions applicable to its corresponding FNF
Restricted Share based upon continued service with FNT and its
affiliates.
(ii) Immediately prior to the effective time of the Spin-off,
each FNF Restricted Share held by an FNT Service Provider will be
forfeited by such FNT Service provider and, as of the effective time
of the Spin-off, FNT shall issue in replacement of such FNF Restricted
Share, a number of restricted shares of FNT Class A Common Stock (a
"Replacement Restricted Share") calculated by multiplying the number
of such FNF Restricted Shares by the Restricted Share Exchange Number,
rounding down to the nearest whole number. The "Restricted Share
Exchange Number" shall equal the product of A divided by B, where A
equals the closing price of a share of FNF common stock on the
business day immediately preceding the date that the Spin-off is
consummated minus the closing price of a share of FNT Class A Common
Stock on the business day immediately preceding the date that the
Spin-off is consummated, and B equals the closing price of a share of
FNT Class A Common Stock on the date that the Spin-off is consummated
(or, if the Spin-off is consummated after the close of trading on the
NYSE on such date, on the next business day following such date),
rounded to the nearest ten thousandth. Each Replacement Restricted
Share shall be subject to the same terms, conditions and restrictions
applicable to its corresponding FNF Restricted Share based upon
continued service with FNT and its affiliates. Notwithstanding the
foregoing, 50% of FNF Restricted Shares held as of the effective time
of the Spin-off by any Dual Service Provider will be canceled and
replaced with Replacement Restricted Shares in accordance with the
foregoing, and the remaining 50% of the FNF Restricted Shares held by
such Dual Service Provider shall be converted into restricted shares
of FIS Common Stock pursuant to the FIS Merger Agreement.
(c) Vesting. Except as may be otherwise set forth in any employment
agreement entered into by FNF with any of its employees with respect to FNF
Options, FNF shall take all necessary action to ensure that the vesting of
outstanding FNF Options under FNF equity compensation plans is not
accelerated by the occurrence of the Asset Contribution, the Spin-off or
the FIS Merger, including by making any necessary amendments to such equity
plans or obtaining any required consents of plan participants.
SECTION 5.3. Employee Benefits. FNT agrees to (i) provide coverage for
employees of FNF and the Subject Companies who become employees of FNT or a FNT
Subsidiary under its medical, dental and health plans as of the Closing Date,
(ii) waive any preexisting conditions, waiting periods and actively at work
requirements under such plans, and (iii) cause such plans to honor any expenses
incurred by the employees and their beneficiaries under similar plans of FNF and
the Subject Companies during the portion of the calendar year in which the
Closing occurs but prior to the Closing Date for purposes of satisfying
applicable deductible, co-insurance and maximum out-of-pocket expenses. FNT will
cause any FNT Benefit Plan (and any other employee benefit plans established by
FNT after the date hereof) in which the employees of FNF and the Subject
Companies are eligible to participate after the Effective Time to take into
account for purposes of eligibility, vesting and benefit accrual thereunder
(but, in respect of benefit accrual, only to the extent it would not result in a
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duplication of benefits for the same period of service), service with FNF and
its Subsidiaries as if such service were with FNT, to the same extent such
service was credited under a comparable plan of FNF or any of the Subject
Companies prior to the Closing Date. With respect to (i) all FNF employee
benefit plans within the meaning of Section 3(3) of ERISA, including the
Fidelity National Financial Group 401(k) Profit Sharing Plan, and (ii) the FNF
Employee Stock Purchase Plan, FNF shall, to the extent any such plan is not
terminated (and all assets distributed and all liabilities satisfied) prior to
the Closing Date, cause the sponsorship of such plans to be transferred to FNT
on or prior to the Closing Date, together with all insurance policies, bonds,
and trust, services and other agreements relating to such plans, and FNT agrees
to assume, or cause a FNT Subsidiary to assume such plans and liabilities.
SECTION 5.4. FNT Stockholders Meeting. FNT shall use reasonable best
efforts to take all action necessary in accordance with applicable law and its
Organizational Documents to convene a meeting of its stockholders (the "FNT
Stockholders Meeting") as promptly as practicable to consider and vote upon the
approval of (i) the issuance of the FNT Shares, (ii) the adoption of the FNT
Stock Plan Amendment and (iii) the adoption of the Amended and Restated
Articles. FNT shall, through its board of directors, recommend to its
stockholders approval of the foregoing matters. FNF agrees to vote the shares of
FNT Common Stock held by it in favor of approval of the foregoing matters at the
FNT Stockholders Meeting.
SECTION 5.5. Access to Information.
(a) FNT shall afford to FNF and the officers, employees, counsel,
financial advisors, accountants, actuaries and other representatives
("Representatives") of FNF reasonable access during normal business hours
during the period prior to the Closing to all of its properties, books,
contracts, commitments, personnel and records and, during such period, FNT
shall furnish as promptly as practicable to FNF such information concerning
its business, properties, financial condition, operations and personnel as
FNF may from time to time reasonably request.
(b) FNF shall afford to FNT and the Representatives of FNT reasonable
access during normal business hours during the period prior to the Closing
to all of the properties, books, contracts, commitments, personnel and
records of the Subject Companies or relating to the Other Assets and the
Assumed Liabilities and, during such period, FNF shall furnish as promptly
as practicable to FNT such information concerning the business, properties,
financial condition, operations and personnel of the Subject Companies or
relating to the Other Assets and the Assumed Liabilities as FNT may from
time to time reasonably request.
(c) Each party agrees that its officers will confer on a regular and
frequent basis with the officers of the other party with respect to their
respective operations, provided that the parties will not confer on any
matter to the extent inconsistent with applicable law.
(d) After the Closing, upon reasonable notice, each party (the
"Providing Party") shall furnish or cause to be furnished to the other
party (the "Requesting Party") and its Representatives during normal
business hours and at the expense of the
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Requesting Party such assistance and access to information, including all
original agreements, documents, books, records and files, of the Providing
Party and its subsidiaries as the Requesting Party shall reasonably request
in connection with financial reporting and accounting matters, the
preparation of and filing of any tax returns, reports or forms or the
defense of any tax claim or assessment, the preparation and filing of
reports and other filings with any Governmental Entity or any other
reasonable purpose, provided that such assistance and access does not
unreasonably disrupt the normal operations of the Providing Party or any of
its subsidiaries. Except as required by applicable law, all confidential
information of the Providing Party so obtained by the Requesting Party
shall be kept confidential by the Requesting Party.
SECTION 5.6. Reasonable Best Efforts. Upon the terms and subject to
the conditions and other agreements set forth in this Agreement, each of the
parties agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other party in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
SECTION 5.7. Public Announcements. FNT and FNF shall consult with each
other before issuing, and provide each other with the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange (in which case the
party subject to such obligations shall advise the other party of such
requirement).
SECTION 5.8. Consents, Approvals and Filings. FNF and FNT shall use
reasonable best efforts to make and cause their respective subsidiaries to make
all necessary filings, as soon as practicable, including those required under
the Securities Act, the Exchange Act, state securities laws and state insurance
laws in order to facilitate prompt consummation of the transactions contemplated
by this Agreement. In addition, FNF and FNT shall each use its reasonable best
efforts, and shall cooperate fully with each other (i) to comply as promptly as
practicable with all governmental requirements applicable to the transactions
contemplated by this Agreement and (ii) to obtain as promptly as practicable all
necessary permits, orders or other consents, approvals or authorizations of
Governmental Entities and consents or waivers of all third parties necessary or
advisable for the consummation of the transactions contemplated by this
Agreement. Each of FNF and FNT shall use its reasonable best efforts to provide
such information and communications to Governmental Entities as such
Governmental Entities may reasonably request. Each of FNF and FNT shall provide
to the other party copies of all applications at least three business days in
advance of filing or submission of such applications to Governmental Entities in
connection with this Agreement.
SECTION 5.9. Directors and Officers. FNT shall cause (a) the
membership of the board of directors of FNT to be as set forth on Section 5.9(a)
of the Disclosure Schedule and (b) each individual listed on Section 5.9(b) of
the Disclosure Schedule to hold the office or offices set forth thereon opposite
such individual's name, in each case effective upon the consummation of the
Closing. In the event that any person listed on Section 5.9(a) or 5.9(b) of
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the Disclosure Schedule is unwilling or unable to serve in the capacity
indicated, FNF and FNT shall mutually agree upon a substitute for such person.
SECTION 5.10. Section 16 Matters. Each of FNF and FNT and their
respective boards of directors (and any committees thereof) shall adopt such
resolutions as are necessary for purposes of Rule 16b-3 under the Exchange Act
to specifically approve any acquisitions or dispositions of equity securities of
FNF or FNT (including derivative securities) in connection with this Agreement,
in each case by each officer or director of FNF or FNT who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to FNF
or FNT, as the case may be.
SECTION 5.11. Related Party Agreements.
(a) FNT and FNF shall, and shall cause their respective subsidiaries
that are party to any of the agreements listed on Section 5.11 of the
Disclosure Schedule (the "Related Party Agreements") to, enter into the
amendments to the Related Party Agreements described in Section 5.11 of the
Disclosure Schedule, which amendments shall be effective at or prior to the
Closing.
(b) At or prior to the Closing, FNT shall, and FNF shall cause FIS to,
enter into the Cross-Indemnity Agreement, which shall be effective as of
the Closing.
(c) At or prior to the Closing, FNT and FNF shall, and FNF shall cause
FIS to, enter into the Tax Disaffiliation Agreement, which shall be
effective as of the Closing.
SECTION 5.12. Certain Contributions.
(a) Prior to the Closing, FNT shall contribute all the shares of
capital stock of the FNT Subsidiaries held by FNT to a newly-formed,
wholly-owned subsidiary of FNT.
(b) Prior to the Closing, FNF shall contribute to FIS all the shares
of capital stock of National Title Insurance of New York, Inc.
SECTION 5.13. Amended and Restated Articles. Immediately after the
consummation of the FIS Merger, FNT shall file the Amended and Restated Articles
with the Secretary of State for the State of Delaware, such Amended and Restated
Articles to be effective upon such filing.
SECTION 5.14. Intercompany Agreements. At or prior to the Closing, FNF
and FNT shall cause all of the agreements listed on Section 5.15 of the
Disclosure Schedule (the "Intercompany Agreements") to be terminated.
SECTION 5.15. Spin-off.
(a) Immediately following the FNT Stockholders Meeting, the board of
directors of FNF shall approve and formally declare the Spin-off dividend
(the "Spin-off Declaration") and set the Record Date. Immediately following
the Closing, FNF shall deliver to Continental Stock Transfer & Trust
Company (the "Transfer Agent")
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certificates representing the shares of FNT Class A Common Stock to be
delivered to the holders of FNF common stock entitled thereto in connection
with the Spin-off, and immediately prior to the consummation of the FIS
Merger, the Transfer Agent shall distribute to each holder (other than FNF
or any FNF Subsidiary) of record of common stock of FNF, as of the close of
business on the record date designated by or pursuant to the authorization
of the board of directors of FNF, such number of shares of FNT Class A
Common Stock as shall be determined in accordance with the formula set
forth in the Spin-off Declaration.
(b) FNT agrees to take any and all actions and enter into any and all
agreements and arrangements reasonably requested by FNF to facilitate the
Spin-off (no matter the form of the Spin-off), including with respect to
the matters set forth in Sections 5.1 and 5.20 of this Agreement, and to
cooperate with FNF in connection with the Spin-off. FNT shall use its
reasonable best efforts to cause its Representatives to cooperate with FNF
in connection with the Spin-off, including making FNT executives available
for any roadshow presentations, providing any indemnities and causing
comfort letters, legal opinions and disclosure letters required by FNF to
be provided in connection therewith and shall take all actions necessary or
desirable to cause such documents to be in customary form.
(c) No certificates representing fractional shares of FNT Class A
Common Stock will be distributed in the Spin-off. As soon as practicable
after the consummation of the Spin-off, FNT shall direct the Transfer Agent
to determine the number of whole shares and fractional shares of FNT Class
A Common Stock allocable to each holder of record or beneficial owner of
FNF Common Stock otherwise entitled to fractional shares of FNT Class A
Common Stock, to aggregate all such fractional shares and sell the whole
shares obtained thereby, in open market transactions or otherwise, in each
case at then prevailing trading prices, and to cause to be distributed to
each such holder or for the benefit of each such beneficial owner to which
a fractional share shall be allocable such holder or owner's ratable share
of the proceeds of such sale, after making appropriate deductions for any
amount required to be withheld for United States federal income tax
purposes and to repay expenses reasonably incurred by the Transfer Agent,
including all brokerage charges, commissions and transfer taxes, in
connection with such sale. FNT and the Transfer Agent shall use their
commercially reasonable efforts to aggregate the shares of FNT Class A
Common Stock that may be held by any beneficial owner thereof through more
than one account in determining the fractional share allocable to such
beneficial owner.
SECTION 5.16. Indemnification and Insurance.
(a) From and after the Closing, FNT agrees that it will indemnify and
hold harmless each person who is, or has been at any time prior to the date
hereof or who becomes prior to the Closing, (i) an officer or director of
FNF or (ii) an officer or director of any other enterprise at the request
of FNF (the "Indemnified Parties"), in respect of all acts or omissions
occurring at or prior to the Closing (including in respect of the
transactions contemplated by this Agreement), to the same extent provided
under the Organizational Documents of FNF as in effect on the date hereof;
provided that such
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indemnification shall be subject to any limitation imposed from time to
time under applicable law. Each Indemnified Party shall be entitled to
advancement of expenses, provided such Indemnified Party provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification. Any determination to
be made as to whether any Indemnified Party has met any standard of conduct
imposed by law shall be made by legal counsel reasonably acceptable to such
Indemnified Party and FNT, retained at FNT's expense.
(b) FNT shall purchase and maintain for a period of not less than six
years from the Closing Date a directors' and officers' insurance and
indemnification policy providing coverage for events occurring prior to the
Closing (the "New D&O Insurance") for all Persons who are directors,
officers or employees of FNF or any subsidiary on the date of this
Agreement (other than for any director, officer or employee of FIS or any
subsidiary of FIS acting in his or her capacity as such). The New D&O
Insurance shall (i) provide coverage substantially the same as that
provided under the directors' and officers' insurance and indemnification
policy currently maintained for the benefit of such Persons (the "Existing
D&O Insurance"), (ii) be issued by an issuer that has a claims-paying
rating at least equal to that of the issuer of the Existing D&O Insurance,
and (iii) be on terms and subject to conditions that are no less
advantageous to such Persons than the Existing D&O Insurance to the extent
commercially available.
(c) FNT agrees to pay all costs and expenses (including fees and
expenses of counsel) that may be incurred by any Indemnified Parties in
successfully enforcing the indemnity or other obligations of FNT under this
Section 5.16. The provisions of this Section 5.16 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives. This Section 5.16 shall not
limit any other indemnification rights any Indemnified Party may have
against FNF or any subsidiary.
(d) In the event that FNT or any of its successors or assigns (i)
consolidates or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision will be made
so that the successors and assigns of FNT assume the obligations set forth
in this Section 5.16.
SECTION 5.17. NYSE Listing. FNT shall use its reasonable best efforts
to cause the shares of FNT Class A Common Stock (i) constituting the FNT Shares
and (ii) to be reserved for issuance upon conversion of the Replacement Options,
to be authorized for listing on the New York Stock Exchange subject to official
notice of issuance, prior to the Closing Date.
SECTION 5.18. Conversion of FNT Class B Common Stock. Concurrently
with the Closing, and immediately prior to the consummation of the Spin-off in
accordance with Section 5.15, FNF shall convert all shares of FNT Class B Common
Stock held by it into shares of FNT Class A Common Stock in the manner set forth
in the articles of incorporation of FNT in effect prior to the amendment thereof
contemplated by this Agreement, and FNT shall deliver to FNF a certificate or
certificates representing such shares of FNT Class A Common Stock and
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shall do all things necessary and proper to give effect to and record such
conversion in the books and records of FNT.
SECTION 5.19. Repayment of Promissory Notes. Prior to the Closing, FNF
shall repay the outstanding principal and interest owing under the intercompany
promissory notes referred to in item 10 of Section 4.1(c) of the Disclosure
Schedule.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions Precedent to Each Party's Obligations. The
respective obligations of each party to consummate the transactions contemplated
hereby are subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Governmental and Regulatory Consents. All filings required to be
made prior to the Closing with, and all consents, approvals, permits and
authorizations required to be obtained prior to the Closing from,
Governmental Entities, including those set forth in Sections 3.1(c) and
3.2(c) of the Disclosure Schedule, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been made or obtained (as the case may be),
and such consents, approvals, permits and authorizations shall be subject
to no conditions other than (i) conditions customarily imposed by insurance
regulatory authorities or (ii) other conditions that would not,
individually or in the aggregate, reasonably be expected to have an FNF
Material Adverse Effect or an FNT Material Adverse Effect. With respect to
any notifications required pursuant to the HSR Act in connection with this
Agreement, the applicable waiting period and any extensions thereof shall
have expired or been terminated.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
Governmental Entity of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated
hereby shall be in effect and no Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law deemed applicable to the transactions contemplated hereby
individually or in the aggregate resulting in, or that is reasonably likely
to result in, any of the foregoing; provided, however, that the party
invoking this condition shall have used reasonable efforts to have any such
order or injunction vacated.
(c) FNT Stockholder Approval. The issuance of the FNT Shares, the
adoption of the FNT Stock Plan Amendment and the adoption of the Amended
and Restated Articles shall have been approved or adopted, as the case may
be, by the affirmative vote of the stockholders of FNT by the requisite
vote in accordance with the Delaware General Corporation Law and the
requirements of the New York Stock Exchange Listed Company Manual.
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(d) Form S-1. The Form S-1 shall have become effective under the
Securities Act and shall not be the subject of any stop order and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) FIS Merger Agreement. The FIS Merger Agreement shall be in full
force and effect, all of the conditions to the consummation of the FIS
Merger contemplated thereby shall have been satisfied or waived (other than
the occurrence of the Spin-off) and FNF and FIS shall be ready to complete
the FIS Merger immediately after the effective time of the Spin-off.
(f) Amendment of Related Party Agreements. The Related Party
Agreements shall have been amended in accordance with Section 5.11.
(g) Termination of Intercompany Agreements. FNF and FNT shall have
terminated all of the Intercompany Agreements.
SECTION 6.2. Conditions Precedent to Obligations of FNT. The
obligations of FNT to consummate the transactions contemplated hereby are
further subject to the satisfaction on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by FNT to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties
of FNF set forth in this Agreement shall be true and correct (without
regard to any qualifications or references to FNF Material Adverse Effect,
Subject Company Material Adverse Effect, "material", "knowledge" or any
other materiality or knowledge qualifications or references contained in
any specific representation or warranty), in each case as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) to the extent any such representation and warranty
speaks as of an earlier date, in which event such representation and
warranty shall be true and correct as of such date, and (ii) where any
failure of the representations or warranties in the aggregate to be true
and correct would not reasonably be expected to have an FNF Material
Adverse Effect, provided that the representations and warranties of FNF
made in Section 3.1(b), the first sentence of Section 3.1(a) and the first,
second and third sentences of Section 3.1(c) shall be true and correct in
all material respects. FNT shall have received a certificate dated as of
the Closing Date and signed on behalf of FNF by a duly authorized executive
officer of FNF confirming, to such officer's knowledge, the matters set
forth in this Section 6.2(a) and Sections 6.2(f) and 6.2(g).
(b) Performance of Obligations of FNF. FNF shall have complied with or
performed in all material respects all covenants and agreements required by
this Agreement to be complied with or performed by it under this Agreement
at or prior to the Closing Date, and FNT shall have received a certificate
dated as of the Closing Date and signed on behalf of FNF by a duly
authorized executive officer of FNF to such effect.
(c) Third-Party Consents and Waivers. All consents and waivers
required to be obtained by FNF from third parties other than Governmental
Entities in connection with the consummation of the transactions
contemplated hereby shall have been obtained,
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other than those which, if not obtained, individually or in the aggregate,
would not have an FNF Material Adverse Effect.
(d) Other Agreements. FIS shall have executed and delivered the
Cross-Indemnity Agreement and FNF and FIS shall have executed and delivered
the Tax Disaffiliation Agreement.
(e) Tax Matters. FNF shall have received (i) an opinion of its special
tax advisor, Deloitte Tax LLP, in substance and form reasonably
satisfactory to FNT, dated the Closing Date, to the effect that, for U.S.
federal income tax purposes, the Asset Contribution will qualify as a
reorganization within the meaning of Section 368(a) of the Code (taking
into account the Spin-off), and the Spin-off will qualify as a tax-free
transaction under Section 355 and related provisions of the Code (including
Section 361(c)(1)) for both FNF and its stockholders, and (ii) from the IRS
a private letter ruling, in substance and form reasonably satisfactory to
FNT, that specifically includes rulings 1, 6, 15, 24 and 25 as requested in
Section VI of the request letter from Deloitte Tax LLP to the IRS dated
June 2, 2006, or rulings substantially to that effect, and such rulings
shall be in full force and effect.
(f) FNF Board Approval of Spin-off. The board of directors of FNF
shall have adopted the Spin-off Declaration.
(g) Assumed Liabilities. As of the Closing, the total Assumed
Liabilities (other than Liabilities subject to indemnification obligations
by FNT in favor of FNF as of the date of this Agreement) that would be
reflected on an unconsolidated balance sheet of FNF prepared in accordance
with GAAP shall not exceed $100,000,000.
SECTION 6.3. Conditions Precedent to Obligations of FNF. The
obligations of FNF to consummate the transactions contemplated hereby are
further subject to the satisfaction on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by FNF to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties
of FNT set forth in this Agreement shall be true and correct (without
regard to any qualifications or references to FNT Material Adverse Effect,
"material", "knowledge" or any other materiality or knowledge
qualifications or references contained in any specific representation or
warranty), in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except (i) to
the extent any such representation and warranty speaks as of an earlier
date, in which event such representation and warranty shall be true and
correct as of such date, and (ii) where any failure of the representations
or warranties in the aggregate to be true and correct would not reasonably
be expected to have an FNT Material Adverse Effect, and FNF shall have
received a certificate dated as of the Closing Date and signed on behalf of
FNT by a duly authorized executive officer of FNT confirming, to such
officer's knowledge, the matters set forth in this Section 6.3(a).
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(b) Performance of Obligations of FNT. FNT shall have complied with or
performed in all material respects all covenants and agreements required by
this Agreement to be complied with or performed by it under this Agreement
at or prior to the Closing Date, and FNF shall have received a certificate
dated as of the Closing Date and signed on behalf of FNT by a duly
authorized executive officer of FNT to such effect.
(c) Third-Party Consents and Waivers. All consents and waivers
required to be obtained by FNT from third parties other than Governmental
Entities in connection with the consummation of the transactions
contemplated hereby shall have been obtained, other than those which, if
not obtained, individually or in the aggregate, would not have an FNT
Material Adverse Effect.
(d) Other Agreements. FNT shall have executed and delivered the
Cross-Indemnity Agreement and the Tax Disaffiliation Agreement.
(e) NYSE Listing. The shares of FNT Class A Common Stock (i)
constituting the FNT Shares and (ii) to be reserved for issuance upon
conversion of the Replacement Options, shall have been authorized for
listing on the New York Stock Exchange upon official notice of issuance.
(f) Tax Matters. FNF shall have received (i) an opinion of its special
tax advisor, Deloitte Tax LLP, in substance and form satisfactory to FNF,
dated the Closing Date, to the effect that, for U.S. federal income tax
purposes, the Asset Contribution will qualify as a reorganization within
the meaning of Section 368(a) of the Code (taking into account the
Spin-off), and the Spin-off will qualify as a tax-free transaction under
Section 355 and related provisions of the Code (including Section
361(c)(1)) for both FNF and its stockholders, and (ii) from the IRS a
private letter ruling, in substance and form satisfactory to FNF, that
specifically includes rulings 1, 6, 15, 24 and 25 as requested in Section
VI of the request letter from Deloitte Tax LLP to the IRS dated June 2,
2006, or rulings substantially to that effect, and such rulings shall be in
full force and effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated and
abandoned at any time prior to the Closing, whether before or after approval of
matters presented in connection with the FNT Stockholders Meeting:
(a) by mutual written consent of FNT and FNF, as authorized by action
of the respective special committees of independent members of the boards
of directors of FNT and FNF;
(b) by either FNT or FNF:
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(i) if, upon a vote at the FNT Stockholders Meeting or any
adjournment or postponement thereof, the FNT Stockholder Approval
shall not have been obtained;
(ii) if the Closing shall not have been consummated on or before
December 31, 2006; provided that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to any party that
has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
failure of the Closing to be consummated by such date;
(iii) if the FIS Merger Agreement shall have been terminated;
(iv) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated
hereby and such order, decree, ruling or other action shall have
become final and nonappealable; or
(c) by FNF in its sole discretion.
SECTION 7.2. Effect of Termination. In the event of termination of
this Agreement by either FNF or FNT as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any Liability on the
part of FNF or FNT, other than Section 3.1(m), Section 3.2(m), this Section 7.2
and Article VIII. Nothing contained in this Section 7.2 shall relieve any party
from any Liability resulting from any willful and material breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement. If FNF terminates this Agreement pursuant to Section 7.1(c), FNF
shall reimburse FNT for all of its reasonable costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees of Banc of America Securities LLC and FNT's attorneys and
accountants and any SEC filing expenses incurred in connection with the FNT
Stockholder Approval.
SECTION 7.3. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties, as authorized by
action of the respective special committees of independent members of the boards
of directors of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the Closing, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to
Section 7.3, waive compliance with any of the agreements of the other parties
contained in this Agreement. The conditions to each of the parties' obligations
to consummate the transactions contemplated hereby are for the sole benefit of
such party and may be waived by such party in whole or in part. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
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The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Closing. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Closing.
SECTION 8.2. Fees and Expenses. Except as otherwise provided in
Section 7.2, prior to the Closing each party hereto shall pay its own fees and
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby. For the
avoidance of doubt, FNT shall bear all SEC registration fees, any state filing
fees, and all printing, mailing, solicitation and other expenses associated with
the Information Statement, the Form S-1 and the FNT Stockholder Vote. All
transfer, documentary, sales, use, stamp, registration and other such taxes and
fees (including penalties and interest) incurred in connection with the
transactions contemplated by this Agreement shall be paid by FNT when due, and
FNT will indemnify FNF against Liability for any such taxes.
SECTION 8.3. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered Personally or sent by overnight courier (providing proof of
delivery) or by facsimile to the parties at the following addresses or facsimile
numbers (or as shall be specified by like notice):
(a) if to FNF, to
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and, if prior to Closing, with a copy (which shall not constitute
notice) to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. Boss
and, if prior to Closing, with a copy (which shall not constitute
notice) to:
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▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇'▇▇▇▇▇
(b) if to FNT, to
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and, if prior to Closing, with a copy (which shall not constitute
notice) to:
▇▇▇▇▇ & Lardner LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any notice, request or other communication given as provided above shall be
deemed given to the receiving party upon actual receipt, if delivered
Personally; on the next business day after deposit with an overnight courier, if
sent by an overnight courier; or upon confirmation of successful transmission if
sent by facsimile (provided that if given by facsimile such notice, request or
other communication shall be followed up within one business day by dispatch
pursuant to one of the other methods described herein).
SECTION 8.4. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. Any fact or item disclosed on any section of the Disclosure Schedule
shall be deemed disclosed on all other sections of the Disclosure Schedule to
the extent such fact's or item's application to such other section is reasonably
apparent on the face of the Disclosure Schedule. Disclosure of any item in the
Disclosure Schedule shall not be deemed an admission that such item represents a
material item, fact, exception of fact, event or circumstance or that occurrence
or non-occurrence of any change or effect related to such item would result in
an FNF Material Adverse Effect or an FNT Material Adverse Effect. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall
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become effective when one or more counterparts have been signed by each party
and delivered to the other party.
SECTION 8.6. Entire Agreement; Third-Party Beneficiaries. This
Agreement (including the Disclosure Schedule) and the other agreements referred
to herein constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. Except as expressly provided in Section 5.16,
this Agreement is for the sole benefit of the parties hereto and their
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon any Person other than
the parties hereto and their successors and permitted assigns any legal or
equitable rights, remedies or claims. The representations and warranties in this
Agreement are the product of negotiations among the parties hereto and are for
the sole benefit of the parties hereto. Any inaccuracies in such representations
and warranties are subject to waiver by the parties hereto in accordance with
this Agreement without notice or Liability to any other Person. In some
instances, the representations and warranties in this Agreement may represent an
allocation among the parties hereto of risks associated with particular matters
regardless of the knowledge of any of the parties hereto. Consequently, Persons
other than the parties hereto may not rely upon the representations and
warranties in this Agreement as characterizations of actual facts or
circumstances as of the date of this Agreement or as of any other date.
SECTION 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise (other than by operation of law in a
merger) by any party without the prior written consent of the other party, and
any such assignment that is not consented to shall be null and void. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 8.8. Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.9. Enforcement; Venue; Waiver of Jury Trial.
(a) The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States or any state court, which in either case is located in
Jacksonville, Florida (any such federal or state court, a "Jacksonville
Court"), in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Jacksonville Court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction or venue by motion or other request
for leave from any such Jacksonville Court and (c) agrees that it will not
bring any action relating to this Agreement or any of
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the transactions contemplated by this Agreement in any court other than a
Jacksonville Court.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 8.9.
SECTION 8.10. Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
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IN WITNESS WHEREOF, FNF and FNT have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
FIDELITY NATIONAL FINANCIAL, INC.
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Name:
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Title:
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FIDELITY NATIONAL TITLE GROUP, INC.
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Name:
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Title:
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SCHEDULE A
SCHEDULED ENTITIES
Fidelity National Insurance Company
Fidelity National Insurance Services, Inc.
Fidelity National Timber Resources Inc.
FNF Capital Leasing, Inc.
FNF Holding, LLC
FNF International Holdings, Inc.
National Alliance Marketing Group, Inc.
Rocky Mountain Aviation, Inc.