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EXHIBIT 99(B)
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
May 14, 1998
among
MICRO GENERAL CORPORATION,
ACS MERGER, INC.,
ACS SYSTEMS, INC.
and
FIDELITY NATIONAL FINANCIAL, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
1.1 The Merger...........................................................................1
1.2 Closing..............................................................................1
1.3 Effective Time of the Merger.........................................................2
1.4 Effects of the Merger................................................................2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2.1 Conversion of Shares.................................................................2
2.2 Surrender and Payment................................................................2
ARTICLE III
THE SURVIVING CORPORATION
3.1 Articles of Incorporation............................................................3
3.2 Bylaws...............................................................................3
3.3 Directors; Officers..................................................................3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company........................................3
(a) Organization, Standing and Corporate Power.............................3
(b) Subsidiaries...........................................................3
(c) Capital Structure......................................................3
(d) Authority; Noncontravention............................................4
(e) SEC Documents; Financial Statements; No Undisclosed Liabilities........4
(f) Licenses, Approvals, etc...............................................5
(g) Absence of Certain Changes or Events...................................5
(h) Litigation.............................................................5
(i) Regulatory Matters; Compliance with Laws...............................5
(j) Taxes..................................................................6
(k) Contracts; Debt Instruments............................................6
(l) Proprietary Rights.....................................................7
(m) Insurance..............................................................7
(n) Brokers................................................................8
(o) Disclosure.............................................................8
4.2 Representations and Warranties of Parent and Merger Subsidiary.......................8
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TABLE OF CONTENTS
(CONTINUED)
(a) Organization, Standing and Corporate Power.............................8
(b) Authority; Noncontravention............................................8
(c) SEC Documents; Financial Statements; No Undisclosed Liabilities........9
(d) Brokers...............................................................10
(e) Insurance.............................................................10
(f) Licenses, Approvals, etc..............................................10
(g) Proprietary Rights....................................................10
(h) Disclosure............................................................11
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Conduct of Business.................................................................11
5.2 Access to Information...............................................................12
5.3 Pooling of Interests; Tax Treatment.................................................12
5.4 Confidentiality.....................................................................12
ARTICLE VI
COVENANTS OF PARENT
6.1 Confidentiality.....................................................................13
6.2 Obligations of Merger Subsidiary....................................................13
6.3 Access to Information...............................................................13
6.4 Tax Treatment.......................................................................14
6.5 Securities Reports..................................................................14
6.6 Implement Employee Benefits.........................................................14
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
7.1 Regulatory Applications; Reasonable Efforts; Notification...........................14
7.2 Press Releases......................................................................15
7.3 Due Diligence.......................................................................15
7.4 Indemnification.....................................................................16
(a) Indemnification of Parent.............................................16
(b) Limitations...........................................................16
(c) Indemnification of Fidelity...........................................16
(d) Claims Procedure......................................................16
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party.........................................17
8.2 Conditions to the Obligations of Parent and Merger Subsidiary.......................18
8.3 Conditions to the Obligations of the Company........................................18
ARTICLE IX
CONDITIONS FOLLOWING THE CLOSING
9.1 Increase Stock Option Plan..........................................................19
9.2 Fidelity Financing..................................................................20
ARTICLE X
TERMINATION
10.1 Termination.........................................................................20
10.2 Effect of Termination...............................................................20
ARTICLE XI
MISCELLANEOUS
11.1 Notices.............................................................................21
11.2 Survival of Representations and Warranties..........................................22
11.3 Amendments; No Waivers..............................................................22
11.4 Fees and Expenses...................................................................22
11.5 Successors and Assigns; Parties in Interest.........................................22
11.6 Severability........................................................................22
11.7 Governing Law.......................................................................23
11.8 Entire Agreement....................................................................23
11.9 Counterparts; Effectiveness; Interpretation.........................................23
11.10 Effect of Disclosure Schedule.......................................................23
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), is entered
into as of May 14, 1998, among ACS SYSTEMS, INC., a California corporation (the
"Company"), MICRO GENERAL CORPORATION, a Delaware corporation ("Parent"), ACS
MERGER, INC., a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Subsidiary") and FIDELITY NATIONAL FINANCIAL, INC., a Delaware
corporation and the indirect parent corporation of the Company ("Fidelity").
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary, the Company and Fidelity have approved the merger of Merger
Subsidiary into the Company as set forth below (the "Merger"), upon the terms
and subject to the conditions set forth in this Agreement and the California
General Corporation Law (the "CGCL"), whereby each issued and outstanding share
of common stock, no par value, of the Company (the "Shares"), all of which
Shares are held by Fidelity, shall be converted into the Merger Consideration
(as defined herein);
WHEREAS, the Board of Directors of Parent has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are fair to and in the best interests of the stockholders
of Parent and (ii) approved this Agreement and the transactions contemplated
hereby, including the Merger;
WHEREAS, it is intended that the Merger be (i) treated as a tax-free
reorganization pursuant to the provisions of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Subsidiary, the Company and Fidelity desire to
make certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to consummation
thereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the CGCL, Merger Subsidiary shall be
merged with and into the Company at the Effective Time (as defined herein). At
the Effective Time, (i) the separate corporate existence of Merger Subsidiary
shall cease, and (ii) the Company shall continue as the surviving corporation as
a direct wholly-owned subsidiary of Parent (Merger Subsidiary and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company, after giving effect to the Merger, is sometimes
hereinafter referred to as the "Surviving Corporation").
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1.2 Closing. The closing of the Merger (the "Closing") shall take place
as soon as practicable, but in any case on or prior to the third business day
after which all of the conditions set forth in Article VIII hereof shall be
fulfilled or waived in accordance with this Agreement (the "Closing Date"). At
the time of the Closing, the Company and Merger Subsidiary will file an
agreement of merger and required officers certificates with the Secretary of
State of the State of California (the "Agreement of Merger") and make all other
filings or recordings required by the CGCL in connection with the Merger.
1.3 Effective Time of the Merger. The Merger shall, subject to the
CGCL, become effective as of such time as the Agreement of Merger is duly filed
with the Secretary of State of the State of California or at such later time as
is specified in the Agreement of Merger (the "Effective Time").
1.4 Effects of the Merger. From and after the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities, duties and
liabilities of the Company and Merger Subsidiary, all as provided under the
CGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Fidelity or Parent:
(a) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving Corporation
and such share shall constitute the only outstanding shares of capital stock of
the Surviving Corporation; and
(b) all Shares outstanding immediately prior to the Effective
Time shall be converted into the right to receive an aggregate of 4,600,000
shares of Parent's common stock, par value $.05 per share, (the "Parent Common
Stock"), without interest (the "Merger Consideration"). The parties hereby
expressly agree that the aggregate Merger Consideration is valued at $6,900,000
and the number of shares of Parent Common Stock to be converted in accordance
with this Section 2.1(b) is calculated by dividing such aggregate value by $1.50
per share. The parties hereby further expressly agree that the Closing is
subject to the satisfaction of all closing conditions set forth in Article VIII
hereof including, without limitation, the delivery of each of the Fairness
Opinions (as defined in Article VIII below).
2.2 Closing; Surrender and Delivery. On the day of the Closing, the
Company shall surrender to Parent a certificate representing the Shares in
exchange for delivery by Parent to the Company of the Merger Consideration. The
Closing shall take place at a time mutually agreed upon by the Company and
Parent, and shall be located at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or such
other location as the Company and Parent shall mutually agree upon prior to the
Closing.
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ARTICLE III
THE SURVIVING CORPORATION
3.1 Articles of Incorporation. The Articles of Incorporation of the
Company in effect at the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until amended in accordance with applicable law.
3.2 Bylaws. The Bylaws of the Company in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation until amended in accordance
with applicable law.
3.3 Directors; Officers. Upon the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of two (2) members, and the
initial directors of the Surviving Corporation shall, until successors are duly
elected and qualified in accordance with applicable law, include the following
individuals: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ and ▇▇▇▇ ▇ ▇▇▇▇▇▇.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company and
Fidelity represent and warrant to Parent and Merger Subsidiary, subject to the
exceptions and qualifications set forth in the disclosure schedule ("Disclosure
Schedule") attached hereto, as follows (whenever the representations or
warranties of the Company and Fidelity are qualified by the knowledge of the
Company and Fidelity, knowledge shall mean knowledge of the executive officers
of the Company and Fidelity):
(a) Organization, Standing and Corporate Power. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the requisite corporate power and
authority to carry on its business as now being conducted. The Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to (i) have
a material adverse effect on the value, condition (financial or otherwise),
prospects, business, or results of operations of the Company as a whole, (ii)
impair the ability of any party hereto to perform its obligations under this
Agreement or (iii) prevent or materially delay consummation of any of the
transactions contemplated by this Agreement (a "Material Adverse Effect"). The
Company will deliver to Parent with the Disclosure Schedule complete and correct
copies of its Articles of Incorporation and Bylaws.
(b) Subsidiaries. The Company does not own, directly or
indirectly, any capital stock or other equity interest in any other Corporation,
joint venture, partnership, limited liability company or other entity or person.
(c) Capital Structure. The authorized capital stock of the
Company consists of 300,000 Shares of Common Stock, no par value per share. As
of the date of this Agreement, (i) 3,000 Shares of Common Stock were issued and
outstanding and (ii) no Shares were held by the
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Company. Except as set forth above, no shares of capital stock or other equity
or voting securities of the Company are issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company are, and all
Shares which may be issued pursuant to the Company Options (as defined below)
will, when issued, be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness or securities of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
There are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is a
party or by which the Company is bound obligating it to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or obligating the Company to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement required in
connection with the consummation of the Merger, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
under, or give rise to a right of termination, cancellation of any obligation or
to a loss of a material benefit under, (i) the Articles of Incorporation or
Bylaws of the Company, (ii) except as disclosed in Section 4.1(d) of the
Disclosure Schedule, any loan or credit agreement, note, instrument of debt,
lien, lease or any other contract, agreement, instrument, permit or license
applicable to the Company or its respective properties or assets, except for
conflicts, violations, or defaults individually or in the aggregate which would
not have a Material Adverse Effect, or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
its properties or assets. No consent, approval, order, license, permit, waiver
or authorization of, or registration, declaration or filing with or exemption,
notice, certification or application by or to (collectively, "Consents") any
federal, state or local government or any arbitrable panel or any court,
administrative or regulatory agency or other governmental authority (a
"Governmental Entity"), is required by or with respect to the Company in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated by this
Agreement, except for (A) the required consents listed on Section 4.1(d) of the
Disclosure Schedule, (B) the filing of the Agreement of Merger in accordance
with the CGCL and similar documents with the relevant authorities of other
states in which the Company is qualified to do business, and (C) such other
Consents as to which the failure to obtain or make, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(e) Financial Statements; No Undisclosed Liabilities. The
Company's audited balance sheets as of December 31, 1997 and December 31, 1996
and the Company's audited statements of income, cash flow and shareholders'
equity for the periods then ended which are
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attached to Section 4.1(e) of the Disclosure Schedule, have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved ("GAAP") (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company as of the dates thereof and the results of its
operations and cash flow for the periods then ended. Except as set forth in
Section 4.1(e) of the Disclosure Schedule, the Company has no liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities and obligations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(f) Licenses, Approvals, etc. The Company possesses or has been
granted all registrations, filings, applications, certifications, notices,
consents, licenses, permits, approvals, certificates, franchises, orders,
qualifications, authorizations and waivers of any Governmental Entity (federal,
state and local) necessary to entitle it to conduct its business in the manner
in which it is presently being conducted (the "Licenses"), except for Licenses
as to which the failure to possess, individually or in the aggregate, would not
have a Material Adverse Effect. Except as described in Section 4.1(f) of the
Disclosure Schedule, no Action (as defined herein) is pending or, to the
knowledge of the Company, threatened seeking the revocation or limitation of any
of the Licenses.
(g) Absence of Certain Changes or Events. Except as contemplated
by this Agreement or disclosed in Section 4.1(g) of the Disclosure Schedule,
since March 31, 1998, the Company has conducted its business only in the
ordinary course consistent with past practice, and there has not been (i) any
event, occurrence or development which, individually or in the aggregate, has
had or could reasonably be expected to have a 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 the Company's
capital stock or any repurchase, redemption or other acquisition by the Company
of any outstanding shares of capital stock or other securities of the Company,
(iii) any damage, destruction or loss, whether or not covered by insurance, that
has had or could have a Material Adverse Effect, (iv) any amendment, waiver or
modification of any material term of any outstanding security of the Company,
(v) any incurrence, assumption or guarantee by the Company of any material
indebtedness for borrowed money or other material obligations, other than in the
ordinary course of business consistent with past practice, (vi) any creation or
assumption by the Company of any lien on any asset, other than in the ordinary
course of business consistent with past practice, or (vii) any making of any
lease, loan, advance or capital contributions to or investment in any person
other than in the ordinary course of business consistent with past practice and
other than investments in cash equivalents made in the ordinary course of
business consistent with past practice.
(h) Litigation. Except as disclosed in Section 4.1(h) of the
Disclosure Schedule, there are no Actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company which, if determined
adversely, would have a Material Adverse Effect.
(i) Regulatory Matters; Compliance with Laws. Neither the Company
nor any of its properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any Governmental Entity. The conduct by the Company of its business is and
has been in compliance with all applicable federal, state, local and foreign
statutes,
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laws, regulations, ordinances, rules, and judgments, orders or decrees, except
for violations or failures to so comply, if any, that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(j) Taxes. For purposes of this Agreement, (A) the term "Returns"
shall mean all returns, declarations, reports, statements, and other documents
required to be filed with respect to federal, state, local and foreign Taxes (as
defined below) or for information purposes, and the term "Return" means any one
of the foregoing Returns, and (B) the term "Taxes" shall mean all federal,
state, local and foreign net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties, or other taxes, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto, and the term "Tax" means any one of the foregoing Taxes.
(i) The Company does not file individual Returns. All of
its properties, income and operations are aggregated with Fidelity for tax
purposes. Except as set forth in Section 4.1(j)(i) of the Disclosure Schedule,
all federal, state, local and foreign Returns which were required to be filed
with respect to the Company or any of its properties, income and/or operations
were duly prepared and filed by Fidelity. As of the time they were filed, such
Returns accurately reflected the material facts regarding the income, business,
assets, operations, activities and status of the Company, and any other
information required to be shown thereon.
(ii) Except as disclosed in Section 4.1(j)(ii) of the
Disclosure Schedule, with respect to all amounts in respect of Taxes imposed on
the Company or for which the Company is or could be liable, whether to taxing
authorities or to other Persons, all amounts required to be paid by or on behalf
of the Company to taxing authorities or others have been paid.
(iii) Except as disclosed in Section 4.1(j)(iii) of the
Disclosure Schedule, there is no review or audit by any taxing authority of any
Tax liability of the Company currently in progress. Except as disclosed in
Section 4.1(j)(iii) of the Disclosure Schedule, the Company has not received any
written notice of any pending or threatened audit by the Internal Revenue
Service or any state, local or foreign agency of any Returns or Tax liability of
the Company for any period. The Company currently has no unpaid deficiencies
assessed by the Internal Revenue Service or any state, local or foreign taxing
authority arising out of any examination of any of the Returns of the Company,
nor, to the knowledge of the Company, is there reason to believe that any
material deficiency will be assessed.
(k) Contracts; Debt Instruments.
(i) Except as otherwise disclosed in Section 4.1(k)(i) of
the Disclosure Schedule or otherwise disclosed to Parent during the Disclosure
Period, the Company is not a party to or subject to:
(A) any collective bargaining or other agreements with
labor unions, trade unions, employee representatives, work committees,
guilds or associations representing employees of the Company;
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(B) any employment, consulting, severance, termination,
or indemnification agreement, contract or arrangement, including any
oral agreement, contract or arrangement which requires the payment of
over $25,000, with any current or former officer, consultant, director
or employee;
(C) except as imposed by applicable regulators, any
agreement, contract, policy, License, document, instrument, arrangement
or commitment that materially limits the freedom of the Company to
compete in any line of business or with any person or in any geographic
area or which would so materially limit the freedom of the Company
after the Effective Time, or by virtue of the transaction contemplated
by this Agreement, Parent, Merger Subsidiary or any of their
subsidiaries after the Effective Time; or
(D) any agreement or contract relating to any
outstanding commitment for capital expenditures, or any partially or
fully executory agreement or contract relating to the acquisition or
disposition of rights or assets other than those entered into in the
ordinary course consistent with past practices.
(ii) Neither the Company nor, to the knowledge of the
Company, any of the other parties to any of the contracts and agreements
identified in Section 4.1(k)(i) of the Disclosure Schedule is in default under
or has terminated any such contract or agreement, or in any way expressed to the
Company an intent to materially reduce or terminate the amount of its business
with the Company in the future.
(l) Proprietary Rights.
(i) "Company Proprietary Rights" shall be defined as all
copyrights, copyright registrations, copyrights applications, trade and division
or other names used in the operation of the Company, and all other material
intellectual properties derived from or used in the conduct of operations of the
Company; and permits, licenses or other agreements to or from third parties
regarding the foregoing or that are related to the Company's products or
business.
(ii) All of the Company Proprietary Rights are listed in
Schedule 4.1(l). Except as disclosed therein, the Company owns and possesses all
right, title and interest in the Company Proprietary Rights. The Company has
taken all necessary action to protect the Company Proprietary Rights and the
transactions contemplated by this Agreement will have no Material Adverse
Effect.
(iii) No claim by any third party contesting the validity,
enforceability, use or ownership of any Company Proprietary Right has been made,
is currently pending or, to the best knowledge of Fidelity and the Company, is
threatened. The Company has not received any notice of, nor is it aware of any
fact which indicates a likelihood of any infringement or misappropriation by any
third party with respect to any of the Company Proprietary Rights. The Company
has not infringed or misappropriated any rights of any third parties, nor is it
aware of any infringement or misappropriation which will occur as a result of
the continued operation of the Company as now conducted.
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(m) Insurance. The Company is covered by valid and currently
effective insurance policies that are customary for companies of similar size
and financial condition which conduct similar businesses. All such policies are
in full force and effect, all premiums due thereon have been paid and the
Company has complied with the provisions of such policies. The Company has not
received any written notice from or on behalf of any insurance carrier issuing
policies or binders relating to or covering the Company that there will be a
cancellation or non-renewal of existing policies or binders, or material
modification of any of the methods of doing business, will be required.
(n) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
(o) Disclosure. The representations and warranties of the Company
contained in this Agreement are true and correct in all material respects and do
not omit any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading. There
is no fact known to the Company which has not been disclosed to Parent in the
Disclosure Schedule which, if taken as a whole, has had, or would reasonably be
expected to have, a Material Adverse Effect.
(p) Title to the Shares. Fidelity is, and at the Closing will be,
the sole owner, beneficially and of record, of the Shares. The Shares are and
will be transferred free and clear of all liens, claims, encumbrances, security
interests, pledges, equities, options, charges, restrictions and defects in
title of any nature whatsoever, other than restrictions imposed by federal and
applicable state securities laws which do not constitute an impediment to the
transactions described in this Agreement.
4.2 Representations and Warranties of Parent and Merger Subsidiary.
Parent and Merger Subsidiary represent and warrant to Fidelity subject to the
exceptions and qualifications set forth in the disclosure schedule attached
hereto (the "Parent Disclosure Schedule") as follows (whenever the
representations or warranties of Parent and Merger Subsidiary are qualified by
the knowledge of Parent and Merger Subsidiary, knowledge shall mean knowledge of
the executive officers of Parent and Merger Subsidiary):
(a) Organization, Standing and Corporate Power. Each of Parent
and Merger Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its respective state of incorporation and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of the Parent and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) could not reasonably be expected to have a material adverse effect on
the value, condition (financial or otherwise), prospects, business, or results
of operations of the Parent and its subsidiaries as a whole, (ii) impair the
ability of any party hereto to perform its obligations under this Agreement or
(iii) prevent or materially delay consummation of any of he transactions
contemplated by this Agreement (a "Parent Material Adverse Effect"). Parent will
deliver to the Company with the Parent
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Disclosure Schedule complete and correct copies of the Certificate of
Incorporation and Bylaws of Parent and Merger Subsidiary, as amended to the date
of this Agreement.
(b) Authority; Noncontravention. Parent and Merger Subsidiary
have all 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 and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Merger Subsidiary. This Agreement has
been duly executed and delivered by Parent and Merger Subsidiary and constitutes
a valid and binding obligation of such party, enforceable against such party in
accordance with its terms. 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, conflict with, or
result in any violation of, or default under, or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or to
a loss of a material benefit under, (i) the Certificate of Incorporation or
Bylaws of Parent or Merger Subsidiary, (ii) except as disclosed in Section
4.2(b) of the Parent's Disclosure Schedule, any loan or credit agreement, note,
instrument of debt, lien, lease or any other contract, agreement, instrument,
permit or license applicable to Parent or Merger Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger
Subsidiary or any other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, losses or liens that individually or in the
aggregate would not impair the ability of Parent and Merger Subsidiary to
perform their respective obligations under this Agreement or prevent the
consummation of any of the transactions contemplated by this Agreement (a
"Parent Material Adverse Effect"). Other than those Consents referred to in the
Disclosure Schedule on the part of the Company, no Consent of any Governmental
Entity is required by or with respect to Parent, Merger Subsidiary or any other
subsidiary of Parent in connection with the execution and delivery of this
Agreement or the consummation by Parent or Merger Subsidiary, as the case may
be, of any of the transactions contemplated by this Agreement, except for (i)
the consents disclosed in Section 4.2(b) of the Parent Disclosure Schedule, (ii)
the filing of the Agreement of Merger in accordance with the CGCL and similar
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iii) compliance with applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), and applicable state blue sky laws and (iv) such other
Consents as to which the failure to obtain or make, individually or in the
aggregate, could not reasonably be expected to have a Parent Material Adverse
Effect.
(c) SEC Documents; Financial Statements; No Undisclosed
Liabilities. Parent has provided or made available to the Company true and
correct copies of all reports, schedules, forms, statements, exhibits and other
documents filed with the Securities and Exchange Commission (the "SEC") by
Parent under or pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act") since January 1, 1996
(the "Parent SEC Documents"), all of which were timely filed with the SEC. As of
their respective dates, or as subsequently amended prior to the date of this
Agreement, the Parent SEC Documents complied in all material respects with the
requirements of the Exchange Act applicable to such Parent SEC Documents, and
none of the Parent SEC Documents 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
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statements therein, in light of the circumstances under which they were made,
not misleading. The Parent SEC Documents include all contracts and other
documents which are required by the Securities Act or the Exchange Act to be
filed as exhibits thereto. The financial statements of the Parent included in
the Parent SEC Documents comply 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 as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Parent and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the Parent SEC Documents, neither the
Parent nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations which, individually or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect.
(d) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Parent or any
of its subsidiaries.
(e) Insurance. The Parent and its subsidiaries are covered by
valid and currently effective insurance policies in favor of the Parent that are
customary for companies of similar size and financial condition which conduct
similar businesses. All such policies are in full force and effect, all premiums
due thereon have been paid and the Parent has complied with the provisions of
such policies with respect to which the failure to comply with would result in a
cancellation of such policies. The Parent has not received any written notice
from or on behalf of any insurance carrier issuing policies or binders relating
to or covering the Parent and its subsidiaries that there will be a cancellation
or non-renewal of existing policies or binders, or material modification of any
of the methods of doing business, will be required.
(f) Licenses, Approvals, etc. Each of the Parent and its
subsidiaries possesses or has been granted all Licenses, except for Licenses as
to which the failure to possess, individually or in the aggregate, would not
have a Parent Material Adverse Effect. Except as described in Section 4.2(f) of
the Parent Disclosure Schedule, no Action (as defined herein) is pending or, to
the knowledge of the Company, threatened seeking the revocation or limitation of
any of the Licenses.
(g) Proprietary Rights.
(i) "Parent Proprietary Rights" shall be defined as all
patents, patent registrations, patent applications, copyrights, copyright
registrations, copyrights applications, trade and division or other names used
in the operation of Parent, and all other material intellectual properties
derived from or used in the conduct of operations of Parent; and permits,
licenses or other agreements to or from third parties regarding the foregoing or
that are related to Parent's products or business.
(ii) All of the Parent Proprietary Rights are listed in
Schedule 4.2(g). Except as disclosed therein, Parent owns and possesses all
right, title and interest in the Parent Proprietary Rights. Parent has taken all
necessary action to protect the Parent Proprietary Rights
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and the transactions contemplated by this Agreement will have no Parent Material
Adverse Effect on Parent's right, title and interest in the Parent Proprietary
Rights.
(iii) No claim by any third party contesting the validity,
enforceability, use or ownership of any Parent Proprietary Right has been made,
is currently pending or, to the best knowledge of Parent, is threatened. Parent
has not received any notice of, nor is it aware of any fact which indicates a
likelihood of any infringement or misappropriation by any third party with
respect to any of the Parent Proprietary Rights. Parent has not infringed or
misappropriated any rights of any third parties, nor is it aware of any
infringement or misappropriation which will occur as a result of the continued
operation of Parent as now conducted.
(h) Disclosure. The representations and warranties of the Parent
contained in this Agreement are true and correct in all material respects, and
do not omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Parent which has not been disclosed to
the Company in the Parent Disclosure Schedule and the Parent SEC Documents,
taken as a whole, which has had, or would reasonably be expected to have, a
Parent Material Adverse Effect.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
5.1 Conduct of Business. During the period from the date of this
Agreement to the Effective Time, the Company shall carry on its businesses in
the ordinary course of business in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable efforts to
preserve intact its current business organizations, keep available the services
of its current officers and employees (as a group) and preserve its
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting the generality of
the foregoing, during the period from the date of this Agreement to the
Effective Time, except as contemplated by this Agreement the Company shall not,
and shall not permit any of its subsidiaries to, without the prior written
approval of Parent (which approval will not be unreasonably withheld):
(a) (i) 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 capital stock; (ii) adjust, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (iii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, 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 the issuance of Shares upon the
exercise of Company Options outstanding as of the date hereof in each case in
accordance with the terms and provisions thereof);
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(c) Amend its Articles of Incorporation, Bylaws or other
comparable charter or organizational documents;
(d) mortgage or otherwise encumber or subject to any lien or
sell, lease, license, transfer or otherwise dispose of any material properties
or assets, except in the ordinary course of business consistent with past
practice or pursuant to existing contracts or commitments;
(e) amend, modify or waive any material term of any outstanding
security of the Company;
(f) incur, assume, guarantee or become obligated with respect to
any indebtedness other than in the ordinary course of business, consistent with
past practice and in accordance with the terms thereof, or incur, assume,
guarantee or become obligated with respect to any other material obligations
other than in the ordinary course of business and consistent with past practice;
(g) make any material tax election or take any material tax
position (unless required by law) or change its fiscal year or accounting
methods, policies or practices (except as required by changes in GAAP) or settle
or compromise any material income tax liability;
(h) enter into any, or commit to enter into, any lease, loan,
advance or capital contributions to or investment in any person other than in
the ordinary course of business consistent with past practice;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction thereof, in the
ordinary course of business consistent with past practice and in accordance with
their terms or the settlement or other disposition of litigation matters by a
payment or payments not exceeding $10,000, or release or waive any material
rights or claims, or waive the benefits of, or agree to modify in any manner,
any confidentiality, standstill or similar agreement to which the Company is a
party;
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.2 Access to Information. From the date hereof until the Effective
Time, the Company will give Parent, its counsel, financial advisors, auditors
and other authorized representatives full access (during normal business hours
and upon reasonable notice) to the offices, properties, officers, employees,
accountants, auditors, counsel and other representatives, books and records of
the Company (including to perform any environmental studies), will furnish to
Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial, operating and property related data and other
information as such persons may reasonably request, and will instruct the
Company's employees, counsel and financial advisors to cooperate with Parent in
its investigation of the business of the Company.
5.3 Tax Treatment. The Company shall not take any action which would
disqualify the Merger as a "reorganization" that would be tax free to Parent
pursuant to Section 368(a) of the Code.
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5.4 Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, the Company will hold, and will use its
reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning
Parent and its subsidiaries furnished to the Company in connection with the
transactions contemplated by this Agreement except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by the Company, (ii) in the public domain through no fault of the Company
or (iii) later lawfully acquired by the Company from sources other than Parent;
provided that the Company may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
persons have a need to know such information, are informed by the Company of the
confidential nature of such information and are directed by the Company to treat
such information confidentially. The Company's obligation to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information. If this Agreement is terminated, the Company will,
and will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, deliver to Parent,
upon request, or, at the election of the Company, destroy, all documents and
other materials and all copies thereof, obtained by the Company or on its behalf
from Parent in connection with this Agreement that are subject to such
confidentiality.
ARTICLE VI
COVENANTS OF PARENT
Parent agrees that:
6.1 Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Parent will hold, and will use its reasonable
best efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information concerning the Company furnished to
Parent in connection with the transactions contemplated by this Agreement except
to the extent that such information can be shown to have been (i) previously
known on a nonconfidential basis by Parent, (ii) in the public domain through no
fault of Parent or (iii) later lawfully acquired by Parent from sources other
than the Company; provided that Parent may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons have a need to know such information, are informed by
Parent of the confidential nature of such information and are directed by Parent
to treat such information confidentially. Parent's obligation to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information. If this Agreement is terminated, Parent will, and
will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, deliver to the
Company, upon request, or, at the election of Parent, destroy, all documents and
other materials and all copies thereof, obtained by Parent or on its behalf from
the Company in connection with this Agreement that are subject to such
confidentiality.
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6.2 Obligations of Merger Subsidiary. Parent will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
6.3 Access to Information. From the date hereof until the Effective
Time, the Parent will give the Company, its counsel, financial advisors,
auditors and other authorized representatives full access (during normal
business hours and upon reasonable notice) to the offices, properties, officers,
employees, accountants, auditors, counsel and other representatives, books and
records of the Parent and its subsidiaries, will furnish to the Company, its
counsel, financial advisors, auditors and other authorized representatives such
financial, operating and property related data and other information as such
persons may reasonably request, and will instruct the Parent's and its
subsidiaries' employees, counsel and financial advisors to cooperate with the
Company in its investigation of the business of the Parent and its subsidiaries;
provided that no investigation pursuant to this Section 6.3 shall affect any
representation or warranty given by the Parent hereunder.
6.4 Tax Treatment. The Parent shall not take any action which would
disqualify the Merger as a "reorganization" that would be tax free to Fidelity
pursuant to Section 368(a) of the Code.
6.5 Securities Reports. Parent agrees to timely file all reports
required to be filed by it pursuant to the Exchange Act. Parent agrees to
provide to the Company copies of all reports and other documents filed under the
Securities Act or Exchange Act with the SEC by it between the date hereof and
the Effective Time within five days after the date such reports or other
documents are filed with the SEC.
6.6 Implement Employee Benefits. Parent shall, as of the Effective
Time, provide all employees of the Company with comparable employee benefits to
those which such Company employees receive from the Company as of the date
hereof, including, without limitation, comparable medical, dental, vision,
chiropractic, psychiatric, psychological and any other health care plans,
cafeteria or flexible credit plans, profit-sharing plans and any plan providing
for the purchase of equity securities by the employees of the Company.
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
7.1 Approvals; Reasonable Efforts; Notification.
(a) Each of Parent and the Company shall (i) promptly prepare and
make or cause to be made all filings required of such party or any of its
subsidiaries and obtain all permits, consents, approvals, and authorizations of
all third parties, Regulatory Authorities and Governmental Entities necessary to
consummate the transactions contemplated by this Agreement, (ii) comply at the
earliest practicable date with any request for additional information,
documents, or other material received by such party or any of its subsidiaries
from any Regulatory Authority or other Governmental Entity in respect of such
filings or such transactions, and (iii) cooperate with the other party in
connection with any such filing, and in connection with resolving any
investigation or other
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inquiry of any such Regulatory Authority or other Governmental Entity. Each
party shall promptly inform the other party of any communication with, and any
proposed understanding, undertaking, or agreement with, any Regulatory Authority
or Governmental Entity regarding any such filings or any such transaction.
Neither party shall participate in any meeting, with any Regulatory Authority or
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Regulatory Authority or Governmental Entity, the opportunity
to attend and participate.
(b) Each of the parties agrees to use all reasonable 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 parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Regulatory Authorities or
Governmental Entities and the making of all other necessary registrations and
filings (including other filings with Regulatory Authorities or Governmental
Entities, if any), (ii) the obtaining of all necessary consents, approvals or
waivers from third parties and (iii) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement.
(c) Each party shall give prompt notice to the other party of (i)
any representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any respect or (ii) the failure by it to comply with or
satisfy in any respect any covenant, condition or agreement to be compiled with
or satisfied by it under this Agreement; 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.
(d) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting it or, in the case of Parent,
any of its subsidiaries which, if pending on the date of this Agreement would
have been required to have been disclosed pursuant to Section 4.1(h), 4.1(i),
4.1(j), 4.1(k) or 4.1(l) or Section 4.2(g) or which relate to the consummation
of the transactions contemplated by this Agreement.
7.2 Press Releases. Parent and Fidelity shall agree with each other as
to the form and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult with each other as to the
form and substance of other public disclosures which may
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relate to the transactions contemplated by this Agreement; provided, however,
that nothing contained herein shall prohibit either party, following
notification to the other party and reasonable opportunity to comment, from
making any disclosure which is required by law, regulation or stock exchange
requirements.
7.3 Due Diligence.
(a) The Company shall permit Parent to conduct a due diligence
investigation of the Company and its assets, liabilities, businesses, books,
records and prospects.
(b) Parent shall permit the Company to conduct a due diligence
investigation of the Parent and its subsidiaries and their respective assets,
liabilities, businesses, books, records and prospects.
7.4 Indemnification.
(a) Indemnification of Parent. Subject to the limitations
contained in this section, Fidelity shall, for one year following the Effective
Time, defend, indemnify and hold harmless Parent, its officers, directors,
stockholders, employees and agents from and against any and all losses, claims,
judgments, liabilities, demands, charges, suits, penalties, costs or expenses,
including court costs and attorneys' fees ("Claims and Liabilities") with
respect to or arising from (i) the breach of any warranty or any inaccuracy of
any representation made by the Company or Fidelity in this Agreement, or (ii)
the breach of any covenant or agreement made by the Company or Fidelity in this
Agreement.
(b) Indemnification of Fidelity. Parent shall, for one year
following the Effective Time, defend, indemnify and hold harmless Fidelity, and
its officers, directors, stockholders, employees and agents against and in
respect to all Claims and Liabilities with respect to or arising from (i) breach
of any warranty or any inaccuracy of any representation made by Parent or Merger
Subsidiary, (ii) breach of any covenant or agreement made by Parent or Merger
Subsidiary in this Agreement.
(c) Limitations. Anything to the contrary notwithstanding, Parent
and Fidelity shall not be indemnified and held harmless in respect of any Claims
and Liabilities which are covered by insurance owned by the Company to the
extent that any net loss is reduced by such insurance.
(d) Claims Procedure. Promptly after the receipt by any
indemnified party (the "Indemnitee") of notice of the commencement of any action
or proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Section 7.4, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of his or its indemnification obligations contained in
this Section 7.4, except where, and solely to the extent that, such failure
actually and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within sixty (60) days after receipt
of such notice, but not in any event after the settlement or compromise of such
claim, the right to defend, at his or its own expense and by his or
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its own counsel, any such matter involving the asserted liability of the
Indemnitee; provided, however, that if the Indemnitee determines that, as a
result of an existing or prospective business relationship between Parent or any
of its subsidiaries on the one hand and any other party or parties to such claim
on the other hand, or as a result of other reasonable circumstances, there is a
reasonable probability that a claim may materially and adversely affect him or
it, other than solely as a result of money payments required to be reimbursed in
full by such Indemnifying Party under this Section 7.4, the Indemnitee shall
have the right to defend, compromise or settle such claim or suit; and,
provided, further, that such settlement or compromise shall not, unless
consented to in writing by such Indemnifying Party, be conclusive as to the
liability of such Indemnifying Party to the Indemnitee. In any event, the
Indemnitee, such Indemnifying Party and his or its counsel shall cooperate in
the defense against, or compromise of, any such asserted liability, and in cases
where the Indemnifying Party shall have assumed the defense, the Indemnitee
shall have the right to participate in the defense of such asserted liability at
the Indemnitee's own expense. In the event that such Indemnifying Party shall
decline to participate in or assume the defense of such action, prior to paying
or settling any claim against which such Indemnifying Party is, or may be,
obligated under this Section 7.4 to indemnify an Indemnitee, the Indemnitee
shall first supply such Indemnifying Party with a copy of a final court judgment
or decree holding the Indemnitee liable on such claim or, failing such judgment
or decree, the terms and conditions of the settlement or compromise of such
claim. An Indemnitee's failure to supply such final court judgment or decree or
the terms and conditions of a settlement or compromise to such Indemnifying
Party shall not relieve such Indemnifying Party of any of his or its
indemnification obligations contained in this Section 7.4, except where, and
solely to the extent that, such failure actually and materially prejudices the
rights of such Indemnifying Party. If the Indemnifying Party is defending the
claim as set forth above, the Indemnifying Party shall have the right to settle
the claim only with the consent of the Indemnitee; provided, however, that if
the Indemnitee shall fail to consent to the settlement of such a claim by the
Indemnifying Party, which settlement (i) the claimant has indicated it will
accept, and (ii) includes an unconditional release of the Indemnitee and its
affiliates by the claimant and imposes no material restrictions on the future
activities of the Indemnitee and its affiliates, the Indemnifying Party shall
have no liability with respect to any payment required to be made to such
claimant in respect of such claim in excess of the proposed amount of
settlement. If the Indemnitee is defending the claim as set forth above, the
Indemnitee shall have the right to settle or compromise any claim against it
after consultation with, but without the prior approval of, any Indemnifying
Party; provided, however, that such settlement or compromise shall not, unless
consented to in writing by such Indemnifying Party, be conclusive as to the
liability of such Indemnifying Party to the Indemnitee.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party. The obligations of the
Company, Parent and Merger Subsidiary to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) any consents, waivers, clearances, approvals and
authorizations of Regulatory Authorities or other Governmental Entities that are
necessary to permit consummation of the Merger shall have been obtained and
shall remain in full force and effect in each case without the
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imposition of any condition, restriction or term which could reasonably be
expected to have a Material Adverse Effect;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order, decree or other legal restraint shall prohibit or
make illegal the consummation of the Merger;
(c) the Board of Directors of the Company shall have duly
authorized and approved the execution and delivery of this Agreement by the
Company and the transactions contemplated hereby prior to the execution by the
Company of this Agreement.
(d) tax opinions addressed to each of Parent and the Company by
KPMG Peat Marwick, independent certified public accountants for both Fidelity
and Parent in form and substance mutually acceptable to Parent and the Company
shall have been obtained with respect to the Merger, based on customary reliance
and subject to customary qualifications, to the effect that, for federal income
tax purposes, the Merger will qualify as a tax-free "reorganization" under
Section 368(a) of the Code.
8.2 Conditions to the Obligations of Parent and Merger Subsidiary. The
obligations of Parent and Merger Subsidiary to consummate the Merger are further
subject to the satisfaction of the following conditions:
(a) there shall not be effected, instituted, pending or proposed
any action by any Governmental Entity (by legislation, rulemaking, change of
applicable law or otherwise) (i) an effect of which is to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
consummation by Parent or Merger Subsidiary of the Merger, seeking to obtain
material damages or imposing any material adverse conditions in connection
therewith or otherwise directly or indirectly relating to the transactions
contemplated by this Agreement or the Merger, (ii) an effect of which is to
impose limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned by
Parent or any of its subsidiaries or affiliates on all matters properly
presented to the Company's stockholders or (iii) that otherwise, in the
reasonable judgment of Parent, is likely to have a Material Adverse Effect or a
Parent Material Adverse Effect;
(b) the Company and Fidelity shall have performed in all material
respects their covenants and agreements under this Agreement, and the
representations and warranties of the Company and Fidelity set forth in this
Agreement shall be true in all material respects when made and at and as of the
Effective Time as if made at and as of such time; and Parent and Merger
Subsidiary shall have received certificates of the Chief Executive Officer or a
Vice President of the Company and Fidelity to that effect;
(c) no change shall have occurred or been threatened (and no
development shall have occurred or been threatened involving a prospective
change) that, in the reasonable judgment of Parent, has or is likely to have a
Material Adverse Effect;
(d) Parent shall have been furnished with copies of the text of
the resolutions by which the corporate action on the part of the Company
necessary to approve this Agreement and the transactions contemplated hereby
were taken, together with a certificate dated as of the Effective Time executed
on behalf of the Company by its corporate secretary certifying to Parent that
such
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copies are true, correct and complete copies of such resolutions and that
such resolutions were duly adopted and have not been amended or rescinded;
(e) Parent's Board of Directors shall have received an opinion
from Cruttenden ▇▇▇▇ Incorporated, its financial advisor, in connection with the
Merger that the Merger Consideration is fair to Parent from a financial point of
view;
(f) Parent shall have received an opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, dated as of the Effective Time, as to
the matters set forth on Exhibit A hereto.
8.3 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the further satisfaction of
the following conditions:
(a) there shall not be effected, instituted, pending or proposed
any action by any Governmental Entity (by legislation, rulemaking, change of
applicable law or otherwise) (i) an effect of which is to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
consummation by the Company of the Merger, seeking to obtain material damages or
imposing any material adverse conditions in connection therewith or otherwise
directly or indirectly relating to the transactions contemplated by this
Agreement or the Merger, (ii) an effect of which is to impose limitations on the
ability of Parent or any of its subsidiaries or affiliates effectively to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote any Shares acquired or owned by Parent or any of its
subsidiaries or affiliates on all matters properly presented to the Company's
stockholders or (iii) that otherwise, in the reasonable judgment of the Company,
is likely to have a Material Adverse Effect or a Parent Material Adverse Effect;
(b) Parent and Merger Subsidiary shall have performed in all
material respects their covenants and agreements under this Agreement, and the
representations and warranties of Parent and Merger Subsidiary set forth in this
Agreement shall be true in all material respects when made and at and as of the
Effective Time as if made at and as of such time; and the Company shall have
received certificates of the Chief Executive Officer or a Vice President of
Parent and Merger Subsidiary to that effect;
(c) no change shall have occurred or been threatened (and no
development shall have occurred or been threatened involving a prospective
change), other than changes resulting from changes in interest rates, that, in
the reasonable judgment of the Company, has or is likely to have a Parent
Material Adverse Effect;
(d) Fidelity's Board of Directors shall have received an opinion
from its financial advisor Wedbush ▇▇▇▇▇▇ Securities that the Merger
Consideration is fair to Fidelity from a financial point of view (the fairness
opinion referenced in this Section 8.3(d), together with the fairness opinion
referenced in Section 8.2(e), shall be known, collectively, as the "Fairness
Opinions");
(e) The Company shall have received an opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., Professional Law Corporation, counsel to Parent and Merger
Subsidiary, dated as of the Effective Time, as to the matters set forth on
Exhibit C hereto;
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(f) Parent shall have increased the size of the Board of
Directors of Parent, effective as of the Closing, from five members to eight
members, all of which members shall have been duly appointed in accordance with
the Delaware General Corporation Law, and such members shall include the
following individuals: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Pickup,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, with two vacancies to
be filled by subsequent appointment by the Corporation's Board of Directors.
ARTICLE IX
CONDITIONS FOLLOWING THE CLOSING
9.1 Adoption of Additional Stock Option Plan. On or before the 60th day
after the Closing Date, Parent shall adopt a new stock option plan (the "Option
Plan"), which Option Plan shall (i) authorize and reserve for issuance (x)
600,000 new shares of Parent's Common Stock, plus (y) the number of shares of
Parent's Common Stock reserved for issuance under Parent's 1995 Incentive Stock
Option Plan (the "1995 Plan") but not granted pursuant to the 1995 Plan as of
the date of this Agreement, and (ii) be in form and substance as is approved by
Fidelity in its discretion. In addition, on or before such 60th day after the
Closing Date, Parent shall have taken all steps necessary and required to adopt
the Option Plan, including, without limitation, obtaining the approval of the
Option Plan by Parent's stockholders and the filing of a Registration Statement
on Form S-8 pursuant to the Securities Act registering the issuance of the
shares of stock under the Option Plan.
9.2 Fidelity Financing. Following the Closing, Fidelity agrees to
provide Parent with up to $5 million in senior unsecured debt financing (the
"Fidelity Financing") on terms and subject to conditions to be mutually agreed
upon between Fidelity and Parent. The parties hereby expressly agree that the
aggregate dollar amount of the Fidelity Financing shall be reduced by the dollar
amount of any intercompany amounts owed by the Company to Fidelity as of the
Closing Date.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time :
(i) by mutual written consent of the Company and Parent;
(ii) by either the Company or Parent, if the Merger has not
been consummated by July 30, 1998 (provided that the party seeking to terminate
the Agreement shall not have breached its obligations under this Agreement in
any material respect);
(iii) by Parent, at any time prior to the Effective Time,
by action of the Board of Directors of Parent, if there has been a breach by the
Company of any of the representations, warranties, covenants or agreements
contained in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case which has or
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could reasonably be expected to have a Material Adverse Effect, provided,
however, that Parent shall not be permitted to terminate this Agreement pursuant
to this Section 10.1(iii) with respect to any such breach or occurrence after
the expiration of a ten (10) day period following Parent's receipt of notice of
such breach from the Company;
(iv) by the Company, at any time prior to the Effective
Time, by action of the Board of Directors of the Company, if any of the
representations, warranties, covenants or agreements contained in this
Agreement, or if any representation or warranty of the Parent or Merger
Subsidiary shall have become untrue, in either case which has or could
reasonably be expected to have a Material Adverse Effect, provided, however,
that the Company shall not be permitted to terminate this Agreement pursuant to
this Section 10.1(v) with respect to any such breach or occurrence after the
expiration of a ten (10) day period following the Company's receipt of notice
such breach from the Parent or Merger Subsidiary; or
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall become void and of no effect with no
liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 5.4, 6.1 and 11.4
shall survive the termination hereof. Specifically, and without limiting the
generality of the foregoing, Parent and Merger Subsidiary agree that, except as
expressly provided in this Section 10.2, termination of this Agreement shall be
their sole and exclusive remedy for any nonwillful breach by the Company of its
representations, warranties and covenants under this Agreement and the Company
agrees that termination of this Agreement shall be its sole and exclusive remedy
for any nonwillful breach by Parent or Merger Subsidiary of their
representations, warranties and covenants under this Agreement. If this
Agreement is terminated by reason of a willful breach by a party, then the
breaching party shall be liable to the non-breaching party for all actual,
consequential and incidental damages suffered by the non-breaching party arising
from such willful breach.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
if to the Company or Fidelity, to:
Fidelity National Financial, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
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with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
if to the Parent or Merger Subsidiary, to:
Micro General Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
with a copy to:
Palmieri, Tyler, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered at the address specified
in this Section.
11.2 Survival of Representations and Warranties. The representations
and warranties and agreements contained herein and in any certificate or other
writing delivered pursuant hereto shall survive the Effective Time or the
termination of this Agreement for a period of one year from the date thereof,
except for the representations, warranties and agreements set forth in Sections
5.4, 6.1, 7.4 and 11.4 which shall have no expiration date.
11.3 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Fidelity,
Parent and Merger Subsidiary or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
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11.4 Fees and Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense; provided, however, with respect to
legal fees only, the parties hereby expressly agree that all legal fees incurred
by the Company, Fidelity, Parent and Merger Subsidiary in connection with the
transactions contemplated by this Agreement shall be aggregated and apportioned
equally between Fidelity, on the one hand, and Parent, on the other hand.
11.5 Successors and Assigns; Parties in Interest. The provisions of
this Agreement shall be binding, upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto except that, with
the consent of the Company, Merger Subsidiary may transfer or assign, in whole
or from time to time in part, to one or more of Parent or any of its
wholly-owned subsidiaries, any or all of its rights or obligations, but any such
transfer or assignment will not relieve Merger Subsidiary of its obligations
under this Agreement. Except as expressly set forth herein nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
not a party hereto any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, including to confer third party beneficiary
rights.
11.6 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
11.7 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of California, without
giving effect to the principles of conflicts of laws thereof.
11.8 Entire Agreement. This Agreement, including Exhibits and
Disclosure Schedules to this Agreement, constitutes the entire agreement, and
supersedes all other prior agreements, written and oral, among the parties, with
respect to the subject matter hereof.
11.9 Counterparts; Effectiveness; Interpretation. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
When a reference is made in this Agreement to a Section, such reference shall be
to a Section of this Agreement unless otherwise indicated. 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".
11.10 Effect of Disclosure Schedule. Notwithstanding anything to the
contrary contained in this Agreement or in any Section of the Disclosure
Schedule, any information disclosed in one Section of the Disclosure
Schedule shall be deemed to be disclosed in all Sections of the Disclosure
Schedule, to the extent that such deemed disclosure is apparent from the
information actually disclosed.
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The parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
MICRO GENERAL CORPORATION
By:
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
ACS MERGER, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President, Treasurer
and Secretary
ACS SYSTEMS, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President
FIDELITY NATIONAL FINANCIAL, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President and Chief Financial Officer
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