EXHIBIT 02.3
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 23, 2002
BY AND AMONG
FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
FD ACQUISITION CORP.
FACTUAL DATA ACQUISITION CORP.
AND
FACTUAL DATA CORP.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 23, 2002, by and among
Factual Data Corp., a Colorado corporation (the "Company"), Fidelity National
Information Solutions, Inc., a Delaware corporation ("FNIS"), FD Acquisition
Corp., a Colorado corporation and wholly-owned subsidiary of FNIS ("First Merger
Sub"), and Factual Data Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of FNIS ("Second Merger Sub") (the "Agreement").
RECITALS
WHEREAS, the Boards of Directors of the Company, FNIS, First Merger Sub
and Second Merger Sub each have determined that a business combination between
the Company and FNIS is advisable and in the best interests of their respective
companies and stockholders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits, and accordingly
have agreed to effect the merger provided for herein upon the terms and subject
to the conditions set forth herein;
WHEREAS, the parties hereto intend that, in the event of a Combination
Cash and Stock Exchange (as defined below), the merger provided for herein shall
qualify for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368 of the U.S. Internal Revenue Code of 1986, as amended
(together with the rules and regulations promulgated thereunder, the "Code") (a
"368 Reorganization"); and
WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company, FNIS, First Merger Sub and Second Merger Sub have
approved and adopted this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) As used herein, the following terms have the following
meanings:
"Affiliate" means, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by, or under common
control with, such Person. For purposes of this definition, the term "Control"
(including the correlative terms "Controlling," "Controlled By" and "Under
Common Control With") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Average FNIS Common Share Price" means the average of the
daily closing prices of a FNIS Common Share (calculated to the nearest 0.0001)
on The Nasdaq National Market for the ten (10) consecutive trading days
immediately preceding and including the Determination Date (or, in the event
that there is no trading of FNIS Common Shares on any day during the
10-trading-day
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period, for such lesser number of days within such 10-trading-day period when
FNIS Common Shares are traded).
"Business Day" means any day other than a Saturday, Sunday or
one on which banks are authorized by law to close in Los Angeles, California.
"Company Common Share" means one share of common stock of the
Company without par value.
"Company SEC Documents" means (i) the annual report on Form
10-K of the Company (the "Company 10-K") for the fiscal year ended December 31,
2001 as amended on April 26, 2002, (ii) the quarterly report on Form 10-Q of the
Company (the "Company 10-Q") for the fiscal quarter ended March 31, 2002, and
(iii) all other reports, filings, registration statements and other documents
filed by the Company with the SEC since December 31, 2001.
"Contracts" means agreements, arrangements, commitments,
contracts, letters of intent, memoranda of understanding, promises, obligations,
rights, instruments, documents or similar understandings, whether written or
oral, formal or informal.
"Determination Date" means the date of satisfaction or, to the
extent permitted in the Agreement, waiver of, the conditions set forth in
Article X (other than conditions that by their nature are to be satisfied at the
Closing).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"FNIS Common Share" means one share of common stock of FNIS,
$0.001 par value per share.
"FNIS SEC Documents" means (i) FNIS's annual report on Form
10-K for its fiscal year ended December 31, 2001 (the "FNIS 10-K"), as amended
on April 30, 2002, (ii) FNIS's quarterly report on Form 10-Q (the "FNIS 10-Q")
for its fiscal quarter ended March 31, 2002, as amended on May 21, 2002, and
(iii) all other reports, filings, registration statements and other documents
filed by FNIS with the SEC since December 31, 2001.
"Fixed Assets" means plants, buildings, fixtures, structures,
furniture and equipment owned, leased or used by the Company or its Subsidiaries
which have an individual value of at least $10,000.
"Governmental Entity" means any federal, state, municipal or
local governmental authority, any foreign or international governmental
authority, or any court, administrative or regulatory agency or commission or
other governmental agency.
"Indemnifying Shareholder" means each of, and "Indemnifying
Shareholders" means collectively, the following Persons: ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together will all of the goodwill
associated therewith, (iii) copyrights (registered and unregistered) and
copyrightable works
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and registrations and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data, data bases and documentation thereof, (vi) trade secrets and other
confidential information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial and marketing plans and
customer and supplier lists and information), (vii) other intellectual property
rights, (viii) Internet URLs, and (ix) copies and tangible embodiments thereof
(in whatever form or medium).
"Knowledge" (and all correlative terms) as to FNIS or the
Company means the actual knowledge of the executive officers or senior
management identified on Section 1.1 of FNIS's or the Company Disclosure
Schedule, respectively, and as to each other Person, means the actual knowledge
of that Person.
"Law" means all laws, statutes and ordinances and all
regulations, rules and other pronouncements of Governmental Entities having the
effect of law of the United States, any foreign country or any foreign or
domestic state, province, commonwealth, city, country, municipality, territory,
protectorate, possession or similar instrumentality or any Governmental Entity
thereof.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset; provided, however, that the term "Lien" shall not include (i) liens for
water and sewer charges and taxes not yet due and payable or being contested in
good faith (and for which adequate accruals or reserves have been established by
the Company or FNIS, as the case may be) and (ii) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business.
"Material Adverse Effect" means a material adverse effect on
the financial condition, business or results of operations of a Person and its
Subsidiaries, taken as a whole, other than (x) effects caused by (i) changes in
general economic or securities markets conditions, (ii) changes in interest rate
levels, (iii) changes that affect the real estate services industry, (iv) (A) in
the case of the Company, the identity of FNIS as the acquiror of the Company or
the conduct of FNIS with respect to the transactions contemplated by this
Agreement prior to the Effective Time, or (B) in the case of FNIS, the identity
of the Company as the acquired party or the conduct of the Company with respect
to the transactions contemplated by this Agreement prior to the Effective Time,
or (v) the public announcement of the transactions contemplated by this
Agreement. "FNIS Material Adverse Effect" means a Material Adverse Effect in
respect of FNIS and its Subsidiaries, taken as a whole, and "Company Material
Adverse Effect" means a Material Adverse Effect in respect of the Company and
its Subsidiaries, taken as a whole.
"Maximum Cash Amount" means an amount determined by FNIS in
consultation with its tax advisers that will not adversely affect the treatment
of the Double Merger (as defined herein) as a tax free reorganization within the
meaning of Section 368 of the Code.
"Merger Share" means a Company Common Share outstanding
immediately prior to the Effective Time (other than Dissenting Shares (as
hereinafter defined) and other than shares to be cancelled in accordance with
Section 3.1(a) hereof).
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"Merger Sub Share" means one share of common stock of First
Merger Sub, without par value.
"Option Exchange Ratio" means a fraction, (i) the numerator of
which is Thirteen Dollars and Seventy-Five Cents ($13.75) and (ii) the
denominator of which is the Average FNIS Common Share Price.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity, quality and frequency) of the relevant Person and its Subsidiaries in
the industry in which the relevant Person and its Subsidiaries does business.
"Per Share Cash Consideration" means any amount of cash
determined by FNIS, in its sole discretion, provided such amount shall not be
less than $3.4375 or greater than $6.875.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including any Governmental Entity.
"Principal Shareholders" means each and all of the following
Persons: ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, CIVC Fund L.P. and BCI Growth V, L.P.
"Proposal" means any offer or proposal, indication of interest
(by public announcement or otherwise), or inquiry with respect to the Company's
willingness to receive or discuss an offer or proposal.
"Proxy Statement/Prospectus" means the proxy
statement/prospectus including the Registration Statement and the proxy
statement for the shareholders of the Company, together with any amendments or
supplements thereto.
"Registration Statement" means the Registration Statement on
Form S-4 registering under the Securities Act the FNIS Common Shares issuable in
connection with the First Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Stock Exchange Ratio" means a fraction, (i) the numerator of
which is equal to Thirteen Dollars and Seventy-Five Cents ($13.75) minus the Per
Share Cash Consideration and (ii) the denominator of which is the Average FNIS
Common Share Price (calculated to the nearest 0.0001).
"Subsidiary" when used with respect to any Person, means any
other Person, whether incorporated or unincorporated, of which (i) more than 50%
of the securities or other ownership interests or (ii) securities or other
interests having by their terms ordinary voting power to elect more than 50% of
the board of directors or others performing similar functions with respect to
such corporation or other organization, is directly owned or controlled by such
Person or by any one or more of its Subsidiaries.
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"Superior Proposal" means a bona fide written Takeover
Proposal made by a Person (or group of Persons) other than FNIS or its
Subsidiaries (i) on terms which the Company's Board of Directors by a majority
vote determines in good faith (after consultation with its independent financial
advisors and outside legal counsel) would result in a transaction, if
consummated, that is more favorable to the Company and the Company's
shareholders, from a financial point of view (taking into account, among other
things, all legal, financial, regulatory and other aspects of the Proposal,
including conditions to consummation) than the transactions contemplated hereby,
such that the Company's Board of Directors is obligated to accept such proposal
in order to comply with its fiduciary duties under applicable law and (ii) for
which any required financing is irrevocably committed in writing executed by the
Person providing such financing or, in the good faith determination of a
majority of the Board of Directors of the Company, such Person is reasonably
capable of providing such financing.
"Takeover" means, other than by FNIS or its Subsidiaries, (i)
a tender or exchange offer for 50% or more of the equity of the Company, (ii) a
merger, reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries as a result of which the Company's
shareholders prior to such transaction (by virtue of their ownership of Company
Common Shares) in the aggregate own less than 50% of the voting securities of
the entity surviving or resulting from such transaction (or the ultimate parent
entity thereof), or (iii) a sale, lease, exchange, transfer or other disposition
of at least 50% of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or a series of related transactions.
"Takeover Proposal" means any unsolicited Proposal for a
Takeover.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs, ad valorem, duties, capital stock, franchise, profits
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Terms Section
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368 Reorganization Recitals
All Cash Consideration Section 3.1(b)(i)
Articles of Incorporation Section 2.3
Articles of First Merger Section 2.2(a)
Average FNIS Common Share Price Section 1.1(a)
Basket Amount Section 12.2(a)
Burdensome Condition Section 9.1
CBCA Section 2.1(a)
Certificate of Incorporation Section 2.3
Certificate of Second Merger Section 2.2(a)
Closing Section 2.2(b)
Code Recitals
Combination Cash and Stock Exchange Section 3.1(b)(ii)
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Terms Section
----- -------
Company Preamble
Company 10-K Section 1.1(a)
Company 10-Q Section 1.1(a)
Company Employee Plans Section 4.15(a)
Company Financial Statements Section 4.8
Company Option Section 3.5(a)
Company Recommendation Section 7.2
Company Returns Section 4.14(a)
Company Securities Section 4.5(b)
Company Shareholder Approval Section 4.31(a)
Company Shareholders Meeting Section 7.2
Competing Transaction Section 7.3(a)
Confidentiality Agreement Section 7.3(a)
Damages Section 12.1
DGCL Section 2.1(b)
Dissenting Shares Section 3.6(a)
Double Merger Section 2.1(b)
Effective Time Section 2.2(a)
End Date Section 11.1(b)(i)
Environmental Laws Section 4.20(b)
ERISA Section 4.15(a)
Estimated Dissenters' Payment Section 3.1(e)
Exchange Agent Section 3.4(a)
Exchange Fund Section 3.4(a)
First Merger Section 2.1(a)
First Merger Sub Recital
First Surviving Corporation Section 2.1(a)
First Surviving Corporation Bylaws Section 2.3
FNIS Preamble
FNIS 10-Ks Section 1.1(a)
FNIS 10-Q Section 1.1(a)
FNIS Financial Statements Section 5.10
FNIS Option Section 3.5(a)
FNIS Securities Section 5.8(b)
GAAP Section 4.8
HSR Act Section 4.3
Indemnified Parties Section 12.1
Indemnifying Shareholders Section 1.1(a)
Knowledge Section 1.1(a)
Option Conditions Section 4.5
Principal Shareholders Section 1.1(a)
Restricted Stock Agreement Section 7.5
Second Merger Section 2.1(b)
Second Merger Sub Preamble
Second Surviving Corporation Section 2.1(b)
Second Surviving Corporation Bylaws Section 2.3
Subsequent Causal Event or Circumstance Section 11.1(d)(ii)
Superior Proposal Section 1.1(a)
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Terms Section
----- -------
Takeover Section 1.1(a)
Takeover Proposal Section 1.1(a)
Termination Fee Section 11.3(c)
Voting Agreement Section 7.4
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, First Merger Sub shall be merged
(the "First Merger") with and into the Company in accordance with the terms and
conditions of this Agreement and of the Colorado Business Corporation Act (the
"CBCA"). Immediately following the First Merger, the separate existence of First
Merger Sub shall cease, and the Company shall be the surviving corporation (the
"First Surviving Corporation"), and shall succeed to and assume all the rights
and obligations of the Company and First Merger Sub in accordance with the CBCA.
(b) In the event that FNIS elects the Combination Cash and
Stock Exchange under Section 3.1(b) below, following the First Merger, as part
of the same plan of reorganization and within three (3) Business Days following
the First Merger, or as soon thereafter as practicable, the First Surviving
Corporation shall be merged (the "Second Merger") with and into the Second
Merger Sub in accordance with the terms and conditions of this Agreement and of
the
Delaware General Corporations Law (the "DGCL") and the CBCA, as applicable.
Immediately following the Second Merger, the separate corporate existence of the
First Surviving Corporation shall cease and the Second Merger Sub shall continue
as the surviving corporation, (the "Second Surviving Corporation"), and shall
succeed to and assume all the rights and obligations of the First Surviving
Corporation and Second Merger Sub in accordance with the DGCL (the "Double
Merger").
Section 2.2 Closing; Effective Time.
(a) Not later than the second Business Day after the
Determination Date, and subject to the satisfaction of any condition that by its
nature is to be satisfied at the Closing, the Company and First Merger Sub will
file articles of merger (the "Articles of First Merger") with the Secretary of
State of the State of Colorado and make all other filings or recordings required
by the CBCA in connection with the First Merger, and, in the event of a Double
Merger, within three (3) Business Days after the Effective Time or as soon as
practicable thereafter, the First Surviving Corporation and the Second Merger
Sub will file a certificate of merger (the "Certificate of Second Merger") with
the Secretary of State of the State of
Delaware and make all other filings or
recordings required by the DGCL and/or CBCA in connection with the Second
Merger. The term "Effective Time" means the date and time of the filing of the
Articles of First Merger with the Secretary of State of the State of Colorado
(or such later time as may be agreed to by each of the parties hereto and
specified in the Articles of First Merger in accordance with the CBCA).
(b) The closing of the First Merger (the "Closing"), and, in
the event of a Double Merger, of the Second Merger, shall be held at the offices
of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or such other place as agreed by the parties) at
10:00 a.m. California time on a date or dates to be specified by the parties,
which, in the case of the First Merger, shall be no later than the second
Business Day after the Determination Date,
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unless the parties hereto agree to another date or time, and, in the case of the
Second Merger, shall be no later than the third Business Day following the
Effective Time or as soon as practicable thereafter.
Section 2.3 Certificate of Incorporation and By-laws of the Surviving
Corporations. In the case of the First Merger, the articles of incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the First Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law (as so amended, the
"Articles of Incorporation"), and, in the event of a Double Merger, the
certificate of incorporation of the Second Merger Sub, as in effect immediately
prior to the effective time of the Second Merger, shall be the certificate of
incorporation of the Second Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law (as so amended, the
"Certificate of Incorporation"). The by-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the by-laws of the First
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law (as so amended, the "First Surviving Corporation By-laws"),
and in the event of a Double Merger, the by-laws of the Second Merger Sub, as in
effect immediately prior to the effective time of the Second Merger, shall be
the by-laws of the Second Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law (as so amended, the "Second
Surviving Corporation By-laws").
Section 2.4 Directors and Officers of the Surviving Corporations. From
and after the Effective Time, the directors of the First Surviving Corporation
shall be the persons who were the directors of First Merger Sub immediately
prior to the Effective Time, and the officers of the First Surviving Corporation
shall be the persons who were the officers of the First Merger Sub immediately
prior to the Effective Time. In the event of a Double Merger, from and after the
effective time of the Second Merger, the directors of the Second Surviving
Corporation shall be the persons who were the directors of Second Merger Sub
immediately prior to the effective time of the Second Merger, and the officers
of the Second Surviving Corporation shall be the persons who were the officers
of the Second Merger Sub immediately prior to the effective time of the Second
Merger. Said directors and officers of the First Surviving Corporation and the
Second Surviving Corporation shall hold office for the term specified in, and
subject to the provisions contained in, the Articles of Incorporation and First
Surviving Corporation By-Laws, with respect to the First Surviving Corporation,
and Certificate of Incorporation and Second Surviving Corporation By-laws, with
respect to the Second Surviving Corporation, and applicable law. If, at or after
the Effective Time, a vacancy shall exist on the Board of Directors or in any of
the offices of the First Surviving Corporation, such vacancy shall be filled in
the manner provided in the Articles of Incorporation and the First Surviving
Corporation By-laws. If, at or after the effective time of the Second Merger, a
vacancy shall exist on the Board of Directors or in any of the offices of the
Second Surviving Corporation, such vacancy shall be filled in the manner
provided in the Certificate of Incorporation and the Second Surviving
Corporation By-laws.
ARTICLE III
CONVERSION OF SECURITIES AND RELATED MATTERS
Section 3.1 Conversion of Company Capital Stock. At the Effective Time,
by virtue of the First Merger:
(a) Each Company Common Share held by the Company as treasury
stock or owned by FNIS or any of its Subsidiaries immediately prior to the
Effective Time shall be cancelled, and no payment shall be made in respect
thereof.
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(b) Subject to Section 3.1(e) and Section 3.6 hereof, each
Merger Share shall be cancelled and, at the Effective Time, shall be converted
into the right to receive, at the election of FNIS (which election, including
the determined amount of the Per Share Cash Consideration, shall be applicable
to all Merger Shares), either: (i) cash of Thirteen Dollars and Seventy-Five
Cents ($13.75) (Section 3.1(b)(i) shall be referred to herein as the "All Cash
Consideration"), or (ii) the Per Share Cash Consideration and a number of FNIS
Common Shares equal to the Stock Exchange Ratio (Section 3.1(b)(ii) shall be
referred to herein as the "Combination Cash and Stock Exchange").
(c) Each Merger Sub Share issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, without par
value, of the First Surviving Corporation, and the First Surviving Corporation
shall be a wholly owned subsidiary of FNIS. Each stock certificate of First
Merger Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the First Surviving Corporation.
(d) Notwithstanding anything to the contrary in this Section
3.1, in the event that the Average FNIS Common Share Price is less than
twenty-five dollars ($25.00), FNIS shall have the option, in the event of a
Combination Cash and Stock Exchange, to (i) close the First Merger at the
Average FNIS Common Share Price or (ii) terminate this Agreement pursuant to
Section 11.1(d)(iv).
(e) Notwithstanding any other provision in this Agreement, in
the event of a Combination Cash and Stock Exchange, the total amount of cash
consideration to be paid by FNIS plus any cash paid to holders of Dissenting
Shares shall in no event exceed the Maximum Cash Amount. In the event of a
Combination Cash and Stock Exchange, and if and to the extent there are
Dissenting Shares pursuant to which, based on FNIS's estimate in Section
3.1(e)(i) below, the total amount of cash consideration paid by FNIS would
exceed the Maximum Cash Amount, the following adjustments shall be made (such
that the aggregate consideration payable by FNIS under Section 3.1(b) and
pursuant to the appraisal rights of Dissenting Shares under Section 3.6 shall be
no greater than the aggregate consideration otherwise payable under Section
3.1(b) were there no Dissenting Shares):
(i) FNIS shall estimate the maximum aggregate amount
(the "Estimated Dissenters' Payment") payable to holders of the Dissenting
Shares under Section 3.6 and the Per Share Cash Consideration shall be reduced
by an amount equal to (A) (1) the Estimated Dissenters' Payment minus (2) the
number of Dissenting Shares multiplied by the initial Per Share Cash
Consideration, divided by (B) the number of non-dissenting Merger Shares; and
(ii) The Stock Exchange Ratio shall be increased by
an amount equal to (A) the number of Dissenting Shares divided by the number of
non-dissenting Merger Shares, multiplied by (B) the initial Stock Exchange
Ratio.
For purposes of illustration only, Schedule 3.1 sets forth an
example of the application of this Section 3.1(e).
Section 3.2 Conversion in Second Merger. In the event of a Second
Merger, each share of the First Surviving Corporation issued and outstanding
immediately prior to the effective date of the Second Merger shall, by virtue of
the Second Merger, be converted into and exchanged for one fully paid, validly
issued and nonassessable share of Common Stock, $0.001 par value, of the Second
Surviving Corporation.
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Section 3.3 Fractional Shares; Adjustments.
(a) No certificate or scrip representing fractional FNIS
Common Shares shall be issued upon the surrender for exchange of certificates
representing Merger Shares, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of FNIS.
Notwithstanding any other provision of this Agreement, each holder of Merger
Shares exchanged pursuant to the First Merger who would otherwise have been
entitled to receive a fraction of a FNIS Common Share (after taking into account
all certificates representing Merger Shares delivered by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount equal to such
fractional part of a FNIS Common Share multiplied by the Average FNIS Common
Share Price.
(b) If at any time during the period between the Determination
Date and the Effective Time, any change in the outstanding shares of capital
stock of FNIS or securities convertible or exchangeable into capital stock of
FNIS shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, or any dividend
or distribution thereon (other than regular quarterly cash dividends) or a
record date with respect to any of the foregoing shall occur during such period,
the Stock Exchange Ratio and the Option Exchange Ratio shall be appropriately
adjusted to provide to the holders of the FNIS Common Shares and the Company
Common Shares the same economic effect as contemplated by this Agreement prior
to the consummation of such event.
Section 3.4 Exchange of Certificates.
(a) Exchange Agent. Promptly after the date hereof, FNIS shall
appoint a commercial bank or trust company, or a subsidiary thereof, as an
exchange agent (the "Exchange Agent") for the benefit of holders of Company
Common Shares. At or immediately prior to the Effective Time, FNIS shall deposit
with the Exchange Agent, for exchange or payment in accordance with this Section
3.4 through the Exchange Agent, (i) certificates evidencing the total number of
whole FNIS Common Shares to be issued in the First Merger, if any, and (ii) cash
necessary to pay amounts due pursuant to Sections 3.1(b) and 3.3(a) (such
certificates for FNIS Common Shares and such cash being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions in accordance with this Article III, deliver the FNIS Common Shares
and cash contemplated to be issued pursuant to this Article III out of the
Exchange Fund. Except as contemplated by Section 3.4(e), Section 3.4(f) or
Section 3.4(g) hereof, the Exchange Fund shall not be used for any other
purpose, and moreover the cash portion of the Exchange Fund shall not be
subjected to any investment risks whatsoever and FNIS shall promptly and
proportionately replenish the Exchange Fund upon any deficiency or loss
resulting from the Exchange Agent's investment activities if necessary to ensure
sufficient funds to meet FNIS' obligations hereunder.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, FNIS shall send, or will cause the Exchange Agent to send, to
each holder of record of a certificate or certificates representing outstanding
Merger Shares that were converted into the right to receive the FNIS Common
Shares and/or cash contemplated to be issued pursuant to this Article III, a
letter of transmittal and instructions (which shall be in customary form and
specify that delivery shall be effected, and risk of loss and title shall pass,
only upon delivery of the certificates representing outstanding Company Common
Shares to the Exchange Agent), for use in the exchange contemplated by this
Section 3.4. Upon surrender of such certificate to the Exchange Agent, together
with a duly executed letter of transmittal, the holder of such certificate shall
be entitled to receive in
10
exchange therefor a certificate representing the applicable portion of the FNIS
Common Shares and cash contemplated to be issued pursuant to this Article III.
Until surrendered as contemplated by this Section 3.4, each certificate
representing Merger Shares shall be deemed at any time after the Effective Time
to represent only the right to receive the applicable portion of the FNIS Common
Shares and/or cash contemplated to be issued pursuant to this Article III. If
any portion of such FNIS Common Shares and/or cash is to be paid to a Person
other than the Person in whose name the certificate representing Merger Shares
is registered, it shall be a condition to such payment that such certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such certificate or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable. If any certificate representing outstanding Company Shares shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such certificate to be lost, stolen or destroyed and, if
required by FNIS, the posting by such Person of a bond, in such reasonable
amount as FNIS may direct, as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent will deliver, in
exchange for such lost, stolen or destroyed certificate, the applicable portion
of the FNIS Common Shares and/or cash contemplated to be issued pursuant to this
Article III.
(c) Distributions with Respect to Unexchanged Shares. Whenever
a dividend or other distribution is declared by FNIS in respect of the FNIS
Common Shares, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
FNIS Common Shares issuable pursuant to this Agreement. No dividends or other
distributions declared or made after the Effective Time with respect to FNIS
Common Shares issuable pursuant to this Agreement shall be paid to the holder of
any unsurrendered certificate representing outstanding Merger Shares until such
certificate is surrendered as provided in this Section 3.4. Following such
surrender, there shall be paid, without interest, to the Person in whose name
the FNIS Common Shares have been registered (i) at the time of such surrender,
the amount of dividends or other distributions with a record date at or after
the Effective Time previously paid or payable on the date of such surrender with
respect to such whole FNIS Common Shares, less the amount of any withholding
taxes that may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions with a
record date at or after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole FNIS Common
Shares, less the amount of any withholding taxes which may be required thereon.
(d) No Further Ownership Rights in the Company Common Shares.
As of the Effective Time, all Company Common Shares shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
representing any such Company Common Shares shall cease to have any rights with
respect thereto, except the right to receive, upon surrender of such
certificate, the applicable portion of the FNIS Common Shares and/or cash
contemplated to be issued pursuant to this Article III. As of the Effective
Time, the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers on the Company's stock transfer books of
Company Common Shares outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates representing outstanding Company Common
Shares are presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Section 3.4.
11
(e) Return of Merger Consideration. Upon demand by FNIS, the
Exchange Agent shall deliver to FNIS any portion of the FNIS Common Shares
and/or cash deposited with the Exchange Agent pursuant to this Section 3.4 that
remains undistributed to holders of Company Common Shares one year after the
Effective Time. Holders of certificates representing outstanding Company Common
Shares who have not complied with this Section 3.4 prior to such demand shall
thereafter look only to FNIS for payment of any claim to the applicable portion
of the FNIS Common Shares and/or cash contemplated to be issued pursuant to this
Article III.
(f) No Liability. Neither FNIS nor the Exchange Agent shall be
liable to any Person in respect of any Company Common Shares (or dividends or
distributions with respect thereto) for any amounts paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Withholding Rights. FNIS shall be entitled to deduct and
withhold from the number of whole FNIS Common Shares (and any dividends or
distributions thereon) and/or cash contemplated to be issued pursuant to this
Article III otherwise payable hereunder to any Person such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign income tax law. To the extent
that FNIS so withholds those amounts, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Shares in respect of which such deduction and withholding was made by
FNIS.
Section 3.5 Company Stock Options.
(a) At the Effective Time, each option or warrant to purchase
Company Common Shares (each, a "Company Option") then outstanding under the
stock incentive plans and warrant agreement set forth on Schedule 3.5, whether
or not vested or exercisable, shall cease to represent a right to acquire
Company Common Shares and shall be converted into an option or warrant, as the
case may be (each, a "FNIS Option"), to acquire, on the same terms and
conditions as were applicable under such Company Option, that number of FNIS
Common Shares determined by multiplying the number of Company Common Shares
subject to such Company Option by the Option Exchange Ratio, with any fractional
shares of FNIS Common Shares resulting from such calculation being rounded down
to the nearest whole share, at a price per share equal to the exercise price per
share of the Company Common Shares covered by such Company Option divided by the
Option Exchange Ratio (rounded up to the nearest whole cent).
(b) Prior to the Effective Time, the Company and FNIS shall
take all actions (including, if appropriate, amending the terms of the Company's
stock option plan, employee purchase plan and other compensation plans or
arrangements) that are necessary to give effect to the transactions contemplated
by Section 3.5(a); provided, however, that the Company shall not take any action
prior to the Effective Time that will extend the exercise period of any Company
Option, cause the vesting period of any Company Option to accelerate under any
circumstances (except for the acceleration of the Special Options granted on May
4, 2001 as set forth on Section 4.5 of the Company Disclosure Schedule), or
otherwise alter any Option Condition, regardless of whether such circumstances
are to occur before or after the Effective Time, except that, upon termination
of the Company's 1999 Employee Stock Purchase Plan, the then current Offering
Period (as defined in the 1999 Employee Stock Purchase Plan) shall be shortened
as provided in Section 19(c) of the 1999 Employee Stock Purchase Plan.
12
(c) At or prior to the Effective Time, FNIS shall take all
corporate action necessary to reserve for issuance a sufficient number of FNIS
Common Shares for delivery upon exercise of the FNIS Options. At the Effective
Time, FNIS shall file a registration statement on Form S-8 (or any successor
form), with respect to the FNIS Common Shares subject to such FNIS Options
(provided that Form S-8 is available for registration of such FNIS Options), and
shall use its reasonable best efforts to maintain the effectiveness of such
registration statement(s), maintain the current status of the prospectus(es)
contained therein and comply with all applicable state securities or "blue sky"
laws for so long as such FNIS Options remain outstanding.
Section 3.6 Shares of Dissenting Shareholders.
(a) Notwithstanding anything in this Agreement to the
contrary, any Company Common Shares that are outstanding immediately prior to
the Effective Time and that are held by shareholders who shall not have voted in
favor of the First Merger and who shall have demanded properly in writing
appraisal of such shares in accordance with Section ▇-▇▇▇-▇▇▇ of the CBCA and
who object to the First Merger and comply with all provisions of the CBCA
concerning the right of such person to dissent from the First Merger and demand
appraisal of such shares (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive FNIS Common Shares and/or cash
contemplated to be issued pursuant to this Article III. Such shareholders shall
be entitled instead to receive the amounts determined in accordance with the
provisions of Sections ▇-▇▇▇-▇▇▇ through 301 of the CBCA. If, after the
Effective Time, any such holder effectively withdraws the demand for appraisal
or fails to preserve such right to appraisal, in either case pursuant to the
CBCA, such Dissenting Shares shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right to
receive the applicable portion of the FNIS Common Shares and/or cash, as
adjusted pursuant to Section 3.1(e) at the Closing, contemplated to be issued
pursuant to this Article III in connection with the First Merger.
(b) Any payments relating to Dissenting Shares shall be made
solely by the First Surviving Corporation or, in the event of a Double Merger,
the Second Surviving Corporation, and the Company shall not make any payment
with respect to, or settle or offer to settle with, the holders of Dissenting
Shares without the prior consent of FNIS. The Company shall give FNIS prompt
notice of any demands received by the Company for the payment of fair value for
Dissenting Shares, and FNIS shall have the right to direct all negotiations and
proceedings with respect to Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Schedule attached hereto,
the Company and each Indemnifying Shareholder jointly and severally represents
and warrants to FNIS as of the date of this Agreement, and provided that the
First Merger is closed, as of the time of filing of the Articles of First
Merger, that:
Section 4.1 Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Colorado and has all corporate power and authority (including all
necessary permits and licenses) required to carry on its business as now
conducted, and to own or lease and operate its properties and assets. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities
13
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Company Material Adverse
Effect. The Company has heretofore made available to FNIS true and complete
copies of the Company's articles of incorporation, by-laws, stock ledgers and
all other corporate records, including minutes and board and shareholder
actions, as currently in effect.
Section 4.2 Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the First Merger and other transactions contemplated hereby are within the
Company's corporate powers and, except for the Company Shareholder Approval (as
hereinafter defined), have been duly authorized by all necessary corporate
action. Assuming that this Agreement constitutes the valid and binding
obligation of FNIS, this Agreement and the Voting Agreement constitute valid and
binding agreements of the Company, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws, now or hereafter in effect, relating to or affecting
creditors' rights and remedies and to general principles of equity.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any Governmental Entity other than (a) the filing of the
Articles of First Merger in accordance with the CBCA; (b) compliance with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") or decrees thereunder applicable to the Company; (c)
compliance with any applicable requirements of the Securities Act and the
Exchange Act; (d) such as may be required under any applicable state securities
or "blue sky" laws; and (e) such other consents, approvals, actions, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not, individually or in the aggregate, (x) be reasonably likely
to have a Company Material Adverse Effect, or (y) prevent or materially impair
the ability of the Company to consummate the transactions contemplated by this
Agreement.
Section 4.4 Non-Contravention. Except as set forth on Section 4.4 of
the Company Disclosure Schedule, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the Company's articles of incorporation and by-laws, (b) assuming
compliance with the matters referred to in Section 4.3, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any of its Subsidiaries, (c) constitute a breach or default (or other event
which, with the giving of notice or lapse of time or both, would constitute a
breach or default) under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any of its
Subsidiaries or to a loss of any benefit or status to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement, contract
or other instrument binding upon the Company or any of its Subsidiaries, or to
which any property or assets of the Company or its Subsidiaries may be bound, or
any license, franchise, permit or other similar authorization held by the
Company or any of its Subsidiaries, or (d) result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries, other than,
in the case of each of (b), (c) and (d), any such items that would not,
individually or in the aggregate, (x) be reasonably likely to have a Company
Material Adverse Effect or (y) prevent or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
14
Section 4.5 Capitalization.
(a) The authorized capital stock of the Company consists of
10,000,000 Company Common Shares, without par value and 1,000,000 shares of
preferred stock, without par value. As of July 19, 2002, there were outstanding
(i) 6,178,895 Company Common Shares and no shares of its preferred stock and
(ii) stock options and warrants (or binding obligations to issue stock options)
to purchase an aggregate of up to 546,316 Company Common Shares (of which
options and warrants to purchase an aggregate of 116,612 Company Common Shares
were vested and immediately exercisable) granted pursuant to the Company's stock
incentive plans and other agreements as set forth in Section 4.5(a) of the
Company Disclosure Schedule. Section 4.5(a) of the Company Disclosure Schedule
describes all such stock options and warrants, including the number of shares
subject to such options and warrants, the time and condition of any vesting or
exerciseability of such options and warrants, the exercise price or prices of
such options or warrants and any provisions providing for any adjustment in such
number of shares, vesting and/or exercise price (collectively, the "Option
Conditions"). Other than as expressly provided for in Section 3.5 above or as
set forth in Section 4.5 of the Company Disclosure Schedule, neither the
execution or delivery of this Agreement, nor the consummation of the
transactions contemplated herein, shall result in any alteration of or have any
affect on the Option Conditions, including without limitation the acceleration
of any vesting under such options or warrants, and the Option Conditions shall
be the same immediately after the effective time of the Second Merger as
immediately prior to the Effective Time. All outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable.
(b) As of the date hereof, except as set forth in this Section
4.5, there are no outstanding (x) shares of capital stock or other voting
securities of the Company, (y) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and (z) options, warrants or other rights to acquire from the Company, and there
is no obligation of the Company to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (x), (y) and (z) being referred
to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities.
Section 4.6 Subsidiaries.
(a) The Company has no Subsidiaries other than as set forth on
Section 4.6 of the Company Disclosure Schedule.
(b) Each Subsidiary of the Company is a corporation duly
incorporated or an entity duly organized, and is validly existing and in good
standing, under the laws of its jurisdiction of incorporation or organization,
has all power and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, in each case with such exceptions as, individually or in the
aggregate, would not have a Company Material Adverse Effect.
(c) All of the outstanding shares of capital stock of, or
other ownership interest in, each Subsidiary of the Company has been validly
issued and is fully paid and nonassessable. All
15
of the outstanding capital stock of, or other ownership interest, which is
owned, directly or indirectly, by the Company in, each of its Subsidiaries is
owned free and clear of any Lien, except as described in Section 4.6(c) of the
Company Disclosure Schedule, and free of any other limitation or restriction
(including any limitation or restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests) with such exceptions
as, individually or in the aggregate, would not have a Company Material Adverse
Effect. There are no outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable or exercisable for shares of
capital stock or other voting securities or ownership interests in any of its
Subsidiaries, (ii) options, warrants or other rights to acquire from the Company
or any of its Subsidiaries, and no other obligation of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable or exercisable
for any capital stock, voting securities or ownership interests in, any of its
Subsidiaries or (iii) obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities of any of its
Subsidiaries or any capital stock of, or other ownership interests in, any of
its Subsidiaries.
Section 4.7 The Company SEC Documents; Nasdaq Listing.
(a) The Company has filed, and has made available to FNIS, the
Company SEC Documents. The Company has filed all reports, filings, registration
statements and other documents required to be filed by it with the SEC. No
Subsidiary of the Company is required to file any form, report, registration
statement or prospectus or other document with the SEC.
(b) As of the respective dates they were filed, the Company
SEC Documents were prepared, and all forms, reports and documents filed with the
SEC after the date of this Agreement and prior to the Closing Date will be
prepared, in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be.
(c) No Company SEC Document contained, nor, subject to Section
4.10(b), will any form, report and document filed after the date of this
Agreement and prior to the date of Closing, contain any untrue statement of
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Except as set forth on Section 4.7(d) of the Company
Disclosure Schedule (i) the Company Common Shares are listed and traded on The
Nasdaq National Market and the Company is in full compliance with all applicable
listing and maintenance requirements of The Nasdaq National Market; (ii) the
Company has never received any notification of de-listing or any other
proceedings or investigations by Nasdaq and there exists no reasonable basis for
any such proceeding or investigation; and (iii) the Company has delivered to
FNIS true, correct and complete copies of all correspondence between the Company
and Nasdaq since June 22, 1999.
Section 4.8 Financial Statements. The Company has delivered to FNIS
true, correct and complete copies of the audited consolidated balance sheets of
the Company as of December 31, 2000 and 2001 and the related audited
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years ended December 31, 2001, together with all related notes
thereto, accompanied by the unqualified opinions of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ PC and BDO ▇▇▇▇▇▇▇, LLP, and no changes have been made thereto since the
date of delivery. The Company has also delivered to FNIS true, correct and
complete copies of the unaudited consolidated balance sheet
16
of the Company as of March 31, 2002 and the related consolidated statements of
operations and cash flows for the three months ended March 31, 2002 and 2001.
The audited and unaudited financial statements of the Company are referred to
collectively herein as the "Company Financial Statements." The Company Financial
Statements, (i) present fairly and accurately the consolidated financial
position of the Company and its Subsidiaries for the periods then ended and
their consolidated results of operations and cash flows for the period then
ended, (ii) were prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP"), and (iii) reflect that the Company has
set aside adequate reserves for all Taxes, federal, state, local, foreign or
otherwise, with respect to the period then ended and all prior periods, and with
respect to receivables, for all reasonably anticipated uncollectible amounts,
losses and costs and expenses in excess of expected receipts.
Section 4.9 No Undisclosed Liabilities. There are no liabilities of the
Company or of any Subsidiary of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, in each
case, other than:
(i) liabilities or obligations disclosed or provided
for in the Company Financial Statements; or
(ii) liabilities or obligations incurred in the
Ordinary Course of Business arising after March 31, 2002 or described in Section
4.9 of the Company Disclosure Schedule.
Section 4.10 Information to Be Supplied.
(a) The information to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement/Prospectus will
(i) in the case of the Registration Statement, at the time it becomes effective,
not 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 not misleading and (ii) in the case of the remainder of the
Proxy Statement/Prospectus, at the time of the mailing thereof, at the time of
the Company Shareholders Meeting (as hereinafter defined) and as of the date of
Closing, not 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. If at any time prior to the date of Closing any event or
information should be discovered by the Company which should be set forth in an
Amendment to the Proxy Statement/Prospectus, the Company shall inform FNIS. The
Proxy Statement/Prospectus will comply (with respect to information relating to
the Company) in all material respects with the provisions of the Securities Act
and the Exchange Act.
(b) Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any statements made or incorporated
by reference in the Proxy Statement/Prospectus based on information supplied by
FNIS for use therein.
Section 4.11 Absence of Certain Changes. Since March 31, 2002, the
Company and its Subsidiaries have conducted their business in the Ordinary
Course of Business and there has not been:
(a) any action, event, occurrence, development, change in
method of doing business, or state of circumstances or facts that, individually
or in the aggregate, has had or would be reasonably likely to have a Company
Material Adverse Effect;
17
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any Company Common Shares or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries;
(c) any transaction or commitment made by, or any contract,
agreement or settlement entered into by, or any judgment, order or decree
affecting, the Company or any of its Subsidiaries relating to its assets or
business (including without limitation the acquisition or disposition of any
assets) or any relinquishment by the Company or any of its Subsidiaries of any
contract or other right, in either case, material to the Company and its
Subsidiaries taken as a whole, other than transactions, commitments, contracts,
agreements or settlements (including, without limitation, settlements of
litigation and tax proceedings) in the Ordinary Course of Business, contemplated
by this Agreement, or as disclosed in Section 4.11(c) of the Company Disclosure
Schedule, or agreed to in writing by FNIS;
(d) any change by the Company in accounting principles or
methods (other than as required by GAAP or Regulation S-X of the Exchange Act);
(e) any cancellation of any debts or claims of the Company or
its Subsidiaries, except in the Ordinary Course of Business;
(f) any mortgage, pledge or subjection to Lien, charge or
encumbrance of any kind on the properties or assets of the Company or its
Subsidiaries, or any occurrence of, assumption of, or taking any properties or
assets subject to, any material liability;
(g) any amendment, modification or termination of any material
Contract to which the Company or a Subsidiary is a party or pursuant to which
the properties or assets of the Company or its Subsidiaries may be bound;
(h) any increase in, or commitment to increase, the
compensation payable or to become payable to, any officer or director of the
Company or its Subsidiaries, their employees or Affiliates, or any commitment to
make severance, bonus or special payments to any of the foregoing Persons upon a
change in ownership or management of the Company or its Subsidiaries or upon
termination of such Persons;
(i) any adoption by the Company or its Subsidiaries of a plan
or agreement or amendment to any plan or agreement providing any new or
additional employee benefits;
(j) any material alteration in the manner of keeping the
books, accounts or records of the Company or its Subsidiaries or in the manner
of preparing the Company Financial Statements, or in the accounting practices of
the Company; or
(k) any material alteration in the operating policies and
procedures of the Company or its Subsidiaries.
Section 4.12 Transactions with Affiliates. Except as disclosed in
Section 4.12 of the Company Disclosure Schedule and except as contemplated
hereby, none of the Company, the Subsidiaries of the Company nor any of their
respective Affiliates is an officer, director, employee, consultant,
distributor, supplier or vendor of, or is party to any contract with, the
Company or any of
18
its Subsidiaries that would be required to be disclosed in a proxy statement
filed by the Company pursuant to the Exchange Act.
Section 4.13 Litigation. Except as disclosed in Section 4.13 of the
Company Disclosure Schedule, there is no action, suit, investigation,
arbitration or proceeding pending, or to the Knowledge of the Company or the
Indemnifying Shareholders, threatened, against the Company or any of its
Subsidiaries, or relating to the transactions contemplated by this Agreement or
any of their respective assets or properties, before any court, arbitrator or
Governmental Entity, nor is the Company aware of any facts or circumstances
which could reasonably lead to or provide the basis for any such action.
Section 4.14 Taxes. Except as set forth in Section 4.14 of the Company
Disclosure Schedule:
(a) (i) the Company and each Subsidiary has timely filed all
tax returns, statements, reports and forms (collectively, the "Company Returns")
required to be filed with any taxing authority by, or with respect to, the
Company and its Subsidiaries; (ii) all such Company Returns were correct and
complete in all material respects; (iii) all Taxes owed by the Company and its
Subsidiaries (whether or not shown on any Tax Return) have been paid; (iv) all
Taxes which may be owed by the Company or its Subsidiaries (whether or not shown
on any Tax Return) and which may be payable between the date of this Agreement
and the Effective Time will be timely paid in full; (v) neither the Company nor
its Subsidiaries is currently the beneficiary of any extension of time within
which to file any Tax Return; (vi) no claim has ever been made by an authority
in a jurisdiction where the Company or a Subsidiary does not file Tax Returns
that the Company or such Subsidiary is or may be subject to taxation by that
jurisdiction; and (vii) there are no Liens on any of the assets of the Company
or its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax;
(b) the Company and each of its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owed to any employee, independent contractor, creditor,
stockholder, or other third party;
(c) no officer (or employee responsible for Tax matters) of
the Company or any of its Subsidiaries expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of the Company or any of its
Subsidiaries either (i) claimed or raised by any authority in writing or (ii) as
to which the Company or any of its Subsidiaries or any of the Indemnifying
Shareholders has Knowledge based upon personal contact with any agent of such
authority. Section 4.14(c) of the Company Disclosure Schedule lists all Tax
Returns that have been audited, and indicates which of those Tax Returns that
currently are the subject of audit. The Company has delivered to FNIS correct
and complete copies of all Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries;
(d) Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency;
(e) Neither the Company nor any of its Subsidiaries has filed
a consent under Code Section 341(f) concerning collapsible corporations;
19
(f) Neither the Company nor any of its Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any Contract
that under any circumstances could obligate it to make any payments that will
not be deductible under Code Section 280G or 162(M);
(g) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii);
(h) The Company and its Subsidiaries have disclosed on their
respective federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662;
(i) Neither the Company nor any of its Subsidiaries is, or has
been, a party to any Tax allocation or sharing Contract;
(j) Neither the Company nor any of its Subsidiaries has made
an election under Treas. Reg. Section 1.1502-20(g)(1);
(k) Neither the Company nor any of its Subsidiaries (i) has
been a member of an Affiliated Group (as defined by the Code) filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company) or (ii) has liability for the Taxes of any Person (other
than the Company and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by Contract, or otherwise; and
(l) The unpaid Taxes of the Company and each Subsidiary (i)
did not, as of the date of the Company Financial Statements, exceed the reserve
for tax liability set forth on the face of the Company Financial Statements
(rather than in any notes thereto) and (ii) do not exceed that reserve as
adjusted for the passage of time through the Effective Time in accordance with
the past custom and practice of the Company and its Subsidiaries in filing their
respective Tax Returns.
Section 4.15 Employees and Employee Benefits.
(a) Section 4.15(a) of the Company Disclosure Schedule
contains a correct and complete list identifying each material "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), each material employment, severance or similar contract,
plan, arrangement or policy and each other material plan or arrangement
providing for compensation, bonuses, profit-sharing, stock option or other stock
related rights or other forms of incentive or deferred compensation or insurance
coverage (including any self-insured arrangements) which is maintained,
administered or contributed to by the Company or any of its Subsidiaries and
covers any employee or former employee of the Company or any of its
Subsidiaries. Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and the most recent written summary
descriptions thereof have been provided to FNIS, together with the most recent
annual report (Form 5500 including, if applicable, Schedule B thereto) prepared
in connection with any such plan. Such plans are referred to collectively herein
as the "Company Employee Plans."
(b) Each Company Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and has received a
favorable determination letter from the Internal Revenue Service stating that it
is so qualified. Nothing has occurred since the date of such
20
letter that would cause it to be revoked, whether prospectively or
retroactively. The Company will make available upon request to FNIS copies of
the most recent Internal Revenue Service determination letters with respect to
each such Company Employee Plan. Each Company Employee Plan has been
administered in compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, which are applicable to such Company Employee
Plan except as would not be reasonably likely to have a Company Material Adverse
Effect.
(c) Except as described on Section 4.15(c) of the Company
Disclosure Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any Company
Employee Plan, trust or loan that will or may result in any material payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee, executive or director
of the Company or any of its Subsidiaries.
(d) Except as set forth on Section 4.15(d) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries maintains
or contributes to any Company Employee Plan which provides, or has any liability
to provide, life insurance, medical or other welfare benefits to any employee(s)
upon their retirement or termination of employment, except as required by
Section 601 of ERISA and Section 4980B of the Code.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to any Company Employee Plan
which would increase materially the expense of maintaining such Company Employee
Plans in the aggregate above the level of the expense incurred in respect
thereof for the fiscal year ended December 31, 2001.
(f) The Company and each of its Subsidiaries is in compliance
with all applicable federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment,
wages, hours and withholding except as would not be reasonably likely to have a
Company Material Adverse Affect.
Section 4.16 Investment Securities. The ownership by the Company and
its Subsidiaries of stocks, bonds and other securities complies in all material
respects with all applicable insurance, trust and other Laws. The Company has
good and valid title to all such investment securities shown as assets in the
Company Financial Statements (unless disposed of in the Ordinary Course of
Business thereafter), free and clear of all material Liens except as described
in Section 4.6(c) of the Company Disclosure Schedule.
Section 4.17 Compliance with Laws. The Company and its Subsidiaries
have all licenses, permits and qualifications necessary to conduct their
businesses and own their properties in each jurisdiction in which the Company or
its Subsidiaries currently do business or own property, or in which such
license, permit or qualification is otherwise required. Except as set forth in
Section 4.17 of the Company Disclosure Schedule (a) the Company and its
Subsidiaries have complied in all material respects with all laws, regulations
and orders applicable to their businesses and the present use by the Company and
its Subsidiaries of their respective properties, and the business conducted by
the Company and its Subsidiaries, does not violate in any material respect any
such laws, regulations or orders and (b) the Company and its Subsidiaries have
timely filed all reports and returns required by law, rule, regulation or policy
of any regulatory authority and all such returns and reports are true
21
and correct in all material respects, and there are no material deficiencies
with respect to such filings or submissions.
Section 4.18 Contracts. Section 4.18 of the Company Disclosure Schedule
contains a complete, current and correct list of all material Contracts of the
Company or any of its Subsidiaries. Except for the execution of this Agreement
which requires the Company to receive consents to the change in control or
assignments contemplated herein from certain contracting parties as noted in
Section 4.4(c) of the Company Disclosure Schedule, no event has occurred which
would constitute a breach or default (or any event which, with the giving of
notice or lapse of time or both, would constitute a breach or default) under any
term or provision of any of the Contracts of the Company or any of its
Subsidiaries, other than such breaches or default that would not have a Company
Material Adverse Effect. Each of the Contracts of the Company or any of its
Subsidiaries is in full force and effect and is the legal, valid and binding
obligation of the Company or any of its Subsidiaries, as the case may be, and,
to the Company's or the Indemnifying Shareholders' Knowledge, the other parties
thereto (subject to, solely with respect to the Contracts set forth in Section
4.4(c) of the Company Disclosure Schedule, the other parties' right to consent
to the change in control of the Company or to approve certain assignments as a
result of this Agreement), enforceable in accordance with its terms, and neither
the Company or its Subsidiaries, nor any of the Indemnifying Shareholders has
any Knowledge of any intent by such other parties to terminate any of the
Contracts prior to their respective expiration dates. Except as described in
Schedule 4.18 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to any Contract that restricts it from carrying on
its business or any part thereof, or from competing in any line of business with
any person, corporation or entity. Prior to the date hereof, the Company has
delivered to FNIS a complete, current and correct copy of each of the material
written Contracts of the Company and its Subsidiaries, as well as a written
summary of each of the material oral Contracts of the Company or any of its
Subsidiaries, including all amendments and modifications thereto.
Section 4.19 Directors' and Officers' Insurance Policies. Section 4.19
of the Company Disclosure Schedule describes the Company's directors' and
officers' insurance policies as in effect on the date hereof. The Company has
not received any notice of cancellation or termination of such directors' and
officers' insurance policy and such insurance policy is valid and enforceable.
Section 4.20 Environmental Matters.
(a) With such exceptions as, individually or in the aggregate,
would not be reasonably likely to have a Company Material Adverse Effect, (i) no
written notice, notification, demand, request for information, citation,
summons, complaint or order has been received or made by, and no investigation,
action, claim, suit, proceeding or review is pending or threatened by any Person
against, the Company or any of its Subsidiaries, with respect to any applicable
Environmental Law, (ii) the Company and its Subsidiaries are and have been in
compliance with all applicable Environmental Laws and (iii) there are no
liabilities or obligations of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, direct or indirect,
determined, determinable or otherwise, arising under or relating to any
Environmental Law (including, without limitation, liabilities or obligations
relating to divested properties or businesses or predecessor entities), and
there are no facts, conditions, situations or set of circumstances that have
resulted or could reasonably be expected to result in or be the basis for any
such liabilities or obligations.
22
(b) For purposes of this Agreement, the term "Environmental
Laws" means any international, national, provincial, regional, federal, state,
local, municipal and foreign statutes, laws (including, without limitation,
common law), judicial decisions, decrees, regulations, ordinances, rules,
judgments, orders, codes, injunctions, permits or governmental agreements or
other requirements relating to human health and safety, to the environment,
including, without limitation, natural resources, or to pollutants,
contaminants, wastes, or chemicals, petroleum products, by-products or
additives, asbestos, asbestos-containing material, polychlorinated biphenyls,
radioactive material, hazardous substances or wastes, or any other substance
(including any product) regulated as harmful or potentially harmful to human
health or the environment.
Section 4.21 Finders' Fees; Fairness Opinion. Other than ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Company, no investment banker, broker, finder or other intermediary
has been involved in the transactions contemplated by this Agreement or that
might otherwise be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries. The amount of any fee or
commission payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company shall be as set forth in
Schedule 4.21 of the Company's Disclosure Schedule. The Company intends to
obtain an opinion from a reputable investment banker as to the fairness from a
financial point of view of the transaction contemplated herein. The amount of
any fee or commission payable to such investment banker shall be no greater than
$300,000.
Section 4.22 Title to Properties. The Company and each of its
Subsidiaries have good, valid and marketable title to all of the properties and
assets which it or such Subsidiary purports to own (personal and mixed, tangible
and intangible), including, without limitation, all the properties and assets
set forth in the Company Financial Statements. All such properties and assets
are free and clear of all title defects or Liens of any kind or nature
whatsoever except for (i) minor imperfections of title, none of which,
individually or in the aggregate, materially detract from the value, or impair
the use, of the property subject thereto or have a Company Material Adverse
Effect, (ii) liens for Taxes not yet due, and (iii) as described in Section
4.6(c) of the Company Disclosure Schedule.
Section 4.23 Real Property. Except as otherwise disclosed in Section
4.23 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries owns any real property.
Section 4.24 Leases. Section 4.24 of the Company Disclosure Schedule
contains a complete, current and correct list of all leases to which the Company
or any of its Subsidiaries is a party. Prior to the date hereof, the Company has
delivered or made available to FNIS complete, current and correct copies of all
such leases, and no changes have been made thereto since the date of delivery.
Each of such leases is valid, binding and enforceable in accordance with its
terms, there are no existing material defaults by the Company or any of its
Subsidiaries thereunder and no event has occurred which would constitute a
default (or any event which, with the giving of notice or lapse of time or both,
would constitute a default) thereunder by the Company or any of its
Subsidiaries. The Company and each of its Subsidiaries is presently in
compliance with all laws, statutes, ordinances, rules, regulations and orders
relating to zoning and land use restrictions which are applicable to any portion
of the premises which are the subject of any of such leases except for
violations that individually, or in the aggregate, would not have a Company
Material Adverse Effect.
Section 4.25 Fixed Assets. The Company has delivered to FNIS a
complete, current and correct list of all Fixed Assets. The Fixed Assets are in
good operating condition and repair, are structurally sound, and are adequate
for the uses to which they are being put. None of the Fixed
23
Assets is in need of replacement, maintenance or repairs, except for ordinary,
routine replacement, maintenance and repairs which are not material in cost.
Section 4.26 Intangible Personal Property. Section 4.26 of the Company
Disclosure Schedule contains a complete and accurate list of all (i) patented or
registered Intellectual Property Rights owned or used by the Company or its
Subsidiaries (other than shrink-wrap or similar over-the-counter licenses), (ii)
pending patent applications and applications for registrations of other
Intellectual Property Rights filed by the Company or its Subsidiaries, and (iii)
unregistered trade names and corporate names owned or used by the Company or its
Subsidiaries. Section 4.26 of the Company Disclosure Schedule also contains a
complete and accurate list of all licenses and other rights granted by the
Company or its Subsidiaries to any third party with respect to any Intellectual
Property Rights and all licenses and other rights granted by any third party to
the Company or its Subsidiaries with respect to any Intellectual Property Rights
(other than shrink-wrap or similar over-the-counter licenses), in each case
identifying the subject Intellectual Property Rights. The Company or the
indicated Subsidiary owns all right, title and interest in and to all of the
Intellectual Property Rights listed on Section 4.26 of the Disclosure Schedule,
free and clear of all Liens or claims of others except as described in Section
4.6(c) of the Company's Disclosure Schedule. The Company owns all right, title
and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the business of the
Company and its Subsidiaries as presently conducted and as presently proposed to
be conducted, free and clear of all Liens or claims of others except as
described in Section 4.6(c) of the Company's Disclosure Schedule. The Company
has taken all necessary and desirable actions to maintain and protect the
Intellectual Property Rights that it and its Subsidiaries own. To the best of
Knowledge of the Company and the Indemnifying Shareholders, the owners of any
Intellectual Property Rights licensed to the Company or its Subsidiaries have
taken all necessary and desirable actions to maintain and protect the
Intellectual Property Rights that are subject to such licenses. There have been
no claims made against the Company or its Subsidiaries asserting the invalidity,
misuse or unenforceability of any of such Intellectual Property Rights, and to
the best of Knowledge of the Company and the Indemnifying Shareholders, there
are no valid grounds for the same. Except as set forth in Section 4.26 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries have
received any notices of, or is aware of any facts which indicate a likelihood
of, any infringement or misappropriation by, or conflict with, any third party
with respect to such Intellectual Property Rights. To the best of Knowledge of
the Company and the Indemnifying Shareholders, the conduct of business of the
Company and its Subsidiaries has not infringed, misappropriated or conflicted
with and does not infringe, misappropriate or conflict with any Intellectual
Property Rights of others, nor would any future conduct as presently
contemplated infringe, misappropriate or conflict with any Intellectual Property
Rights of others. To the best of Knowledge of the Company and the Indemnifying
Shareholders, the Intellectual Property Rights owned by or licensed to the
Company or its Subsidiaries have not been infringed, misappropriated or
conflicted by others. The transactions contemplated by this Agreement shall have
no adverse effect on right, title and interest of the Company or its
Subsidiaries in and to the Intellectual Property Rights listed on Section 4.26
of the Company Disclosure Schedule, including without limitation the Company's
Intellectual Property Rights in the name "Factual Data." To the best of
Knowledge of the Company and the Indemnifying Shareholders, none of Company's or
its Subsidiaries' employees are obligated under any Contract, or subject to any
order, that would interfere with the use of his or her best efforts to promote
the interests of the Company and its Subsidiaries or that would conflict with
the business as presently conducted and as presently proposed to be conducted by
the Company and its Subsidiaries. Neither the execution of this Agreement nor
the transactions contemplated by this Agreement nor the carrying on of business
of the Company and its Subsidiaries by the employees of the Company or its
24
Subsidiaries, nor the conduct of business as presently proposed to be conducted
by the Company and its Subsidiaries, will conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument known to the Company under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its or its Subsidiaries' employees
(or people it currently intends to hire) made prior to their employment by the
Company or its Subsidiaries, except for any inventions that have been assigned
or licensed to Company or its Subsidiaries as of the date hereof.
Section 4.27 Licenses and Permits. Section 4.27 of the Company
Disclosure Schedule contains a complete, current and correct list of all
material licenses, permits, franchises, rights and privileges necessary or
required to conduct the business of the Company and of its Subsidiaries as the
same are conducted on the date hereof. The Company and its Subsidiaries possess
all licenses necessary for the present conduct of the business of the Company
and its Subsidiaries, including, without limitation, any and all licenses issued
by any Governmental Entity. Each of such licenses is in full force and effect,
and there are no pending or threatened claims or proceedings challenging the
validity of, or seeking to revoke or discontinue, any such licenses. Assuming
receipt by the Company of the consents set forth in Section 10.3(f), none of the
transactions contemplated by this Agreement nor any prior operations or history
shall affect the validity of, or cause the revocation or discontinuation of any
of such licenses. The Company shall make available to FNIS at FNIS's request,
any such license, which such license shall be complete and current.
Section 4.28 Insurance. The Company has delivered to FNIS a complete,
current and correct, description of all existing policies of fire, liability,
worker's compensation and all other forms of insurance maintained by the Company
or any of its Subsidiaries. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
hereof have been paid, and no notice of cancellation, termination or denial of
coverage has been received with respect to any such policy. Such policies (i)
are adequate for compliance with all requirements of law and of all agreements
or instruments to which the Company or any of its Subsidiaries is a party, or
pursuant to which any of their properties or assets may be subject, (ii) are
valid, outstanding and enforceable policies, (iii) provide adequate insurance
coverage for the properties, assets and operations of the Company and its
Subsidiaries as presently conducted, (iv) will remain in full force and effect
through the their respective dates of coverage, without the payment of
additional premiums, and (v) will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. Section
4.28 of the Company Disclosure Schedule describes all claims which are pending
under such insurance policies or that have been paid to the Company or any of
its Subsidiaries since December 31, 1998. Since December 31, 1998, neither the
Company nor any of its Subsidiaries has been refused any insurance with respect
to its properties, assets or operations, nor has their coverage been limited by
any insurance carrier to which they have applied for any such insurance or with
which they have carried insurance.
Section 4.29 Employees. The Company has provided to FNIS a complete,
current and correct list of all employees of the Company and each of its
Subsidiaries, which includes the job position and compensation (including,
without limitation, bonuses) payable to each such employee. Except to the extent
set forth in Section 4.29 of the Company Disclosure Schedule:
(a) The Company and its Subsidiaries are in compliance with
all laws, statutes, ordinances, rules, regulations, orders and other
requirements relating to the employment of labor, including, without limitation,
Title VII of the federal Civil Rights Act of 1964, the federal Age
Discrimination in Employment Act of 1967, the federal Employee Retirement Income
Security Act
25
of 1974, and any and all provisions thereof relating to wages, hours, collective
bargaining and the payment of social security and similar Taxes, except where
any noncompliance would not have a Company Material Adverse Effect;
(b) There is no pending or threatened charge, complaint,
allegation, application or other process or claim pending or threatened against
the Company or any of its Subsidiaries before any Governmental Entity; and
(c) There is no labor dispute, strike, slowdown, work stoppage
or other job action pending, threatened against or otherwise affecting the
Company or any of its Subsidiaries.
Section 4.30 Banks. Section 4.30 of the Company Disclosure Schedule
sets forth (i) the name and address of each bank, trust company, savings and
loan association, thrift institution, credit union or other financial
institution in which the Company or any of its Subsidiaries maintains a checking
or savings account or any safe deposit box, and the title and number of each
such account, and all restrictions or limitations thereon, and (ii) the names of
all persons authorized by the Company or any of its Subsidiaries to draw thereon
or to effect transactions in connection therewith, or to have access to any safe
deposit box or vault.
Section 4.31 Required Vote; Board Approval.
(a) The only vote of the holders of any class or series of
capital stock of the Company required by law, rule or regulation to approve this
Agreement, the First Merger and/or any of the other transactions involving the
Company contemplated hereby is the affirmative vote (the "Company Shareholder
Approval") of the holders of not less than 66-2/3 percent of the outstanding
Company Common Shares in favor of the adoption and approval of this Agreement,
the First Merger and the other transactions involving the Company contemplated
hereby.
(b) The Company's Board of Directors has (i) determined that
this Agreement and the transactions contemplated hereby, including the First
Merger, are in the best interests of the Company and its shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved (subject to Section 7.2) to recommend to such shareholders that they
vote in favor of adopting and approving this Agreement and the First Merger in
accordance with the terms hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FNIS
Except as disclosed in the FNIS Disclosure Schedule attached hereto,
FNIS hereby makes to the Company as of the date of this Agreement, and provided
that the First Merger is closed, as of the time of filing of the Articles of
First Merger, the representations and warranties set forth in Section 5.1
through Section 5.7 below, and, solely in the event of a Combination Cash and
Stock Exchange, the representations and warranties set forth in Section 5.7
through 5.12 below.
Section 5.1 Corporate Existence and Power. FNIS is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of
Delaware and has all corporate powers required to carry on its business as
now conducted. FNIS is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a FNIS Material
26
Adverse Effect. FNIS has heretofore made available to the Company true and
complete copies of FNIS's restated certificate of incorporation and by-laws as
currently in effect.
Section 5.2 Corporate Authorization. The execution, delivery and
performance by FNIS of this Agreement and the consummation by FNIS of the
transactions contemplated hereby are within the corporate power and authority of
FNIS and have been duly authorized by all necessary corporate action. Assuming
that this Agreement constitutes the valid and binding obligation of the Company,
this Agreement constitutes a valid and binding agreement of FNIS, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect, relating to or
affecting creditors' rights and remedies and to general principles of equity.
Section 5.3 Governmental Authorization. The execution, delivery and
performance by FNIS of this Agreement, and the consummation by FNIS of the First
Merger require no action by or in respect of, or filing with, any Governmental
Entity other than (a) the filing of the Articles of First Merger in accordance
with the CBCA; (b) compliance with any applicable requirements of the HSR Act;
(c) compliance with any applicable requirements of the Securities Act and the
Exchange Act; (d) such as may be required under any applicable state securities
or "blue sky" laws; (e) compliance with any applicable Environmental Laws or
state environmental property transfer laws; and (f) such other consents,
approvals, actions, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not, individually or in the
aggregate, (i) be reasonably likely to have a FNIS Material Adverse Effect, or
(ii) prevent or materially impair the ability of FNIS to consummate the
transactions contemplated by this Agreement.
Section 5.4 Non-Contravention. Except as set forth on Section 5.4 of
the FNIS Disclosure Schedule, the execution, delivery and performance by FNIS of
this Agreement and the consummation by FNIS of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the restated
certificate of incorporation or by-laws of FNIS, (b) assuming compliance with
the matters referred to in Section 5.3, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to FNIS or any of its
Subsidiaries, (c) constitute a breach or default under or give rise to a right
of termination, cancellation or acceleration of any right or obligation of FNIS
or any of its Subsidiaries or to a loss of any benefit or status to which FNIS
or any of its Subsidiaries is entitled under any provision of any agreement,
contract or other instrument binding upon FNIS or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by FNIS or any of
its Subsidiaries, or (d) result in the creation or imposition of any Lien on any
asset of FNIS or any of its Subsidiaries other than, in the case of each of (b),
(c) and (d), any such items that would not, individually or in the aggregate,
(x) be reasonably likely to have a FNIS Material Adverse Effect or (y) prevent
or materially impair the ability of FNIS to consummate the transactions
contemplated by this Agreement.
27
Section 5.5 Finders' Fees. No investment banker, broker, finder or
other intermediary has been involved in the transactions contemplated by this
Agreement or that might otherwise be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of FNIS; provided, however, that FNIS intends
to obtain an opinion from a reputable investment banker as to the fairness from
a financial point of view of the transaction contemplated herein.
Section 5.6 Required Vote; Board Approval.
(a) No vote of the holders of any class or series of capital
stock of FNIS is required by law, rule or regulation to approve this Agreement,
the First Merger and/or any of the other transactions contemplated hereby.
(b) FNIS's Board of Directors has (a) determined that this
Agreement and the transactions contemplated hereby, including the First Merger,
are in the best interests of FNIS and its stockholders, and (b) approved this
Agreement and the transactions contemplated hereby.
Section 5.7 Information to Be Supplied.
(a) The information to be supplied by FNIS for inclusion or
incorporation by reference in the Proxy Statement/Prospectus will (i) in the
case of the Registration Statement, at the time it becomes effective, not
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 not misleading and (ii) in the case of the remainder of the Proxy
Statement/Prospectus, at the time of the mailing thereof, at the time of the
Company Shareholders Meeting and on the date of Closing, not 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. The Proxy
Statement/Prospectus will comply (with respect to information relating to FNIS)
in all material respects with the provisions of the Securities Act and the
Exchange Act.
(b) Notwithstanding the foregoing, FNIS makes no
representation or warranty with respect to any statements made or incorporated
by reference in the Proxy Statement/Prospectus based on information supplied by
the Company for use therein.
Section 5.8 Capitalization of FNIS.
(a) The authorized capital stock of FNIS consists of
200,000,000 FNIS Common Shares, and 2,000,000 shares of preferred stock, $0.001
par value per share. As of July 17, 2002, there were outstanding (i) 37,874,790
FNIS Common Shares, (ii) no shares of FNIS preferred stock, (iii) stock options
to purchase an aggregate of 4,046,534 FNIS Common Shares (of which options to
purchase an aggregate of 1,600,340 FNIS Common Shares were vested and
immediately exercisable), and (iv) stock options to purchase FNIS Common Shares
pursuant to the [FNIS Plans]. All outstanding shares of capital stock of FNIS
have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, except (i) as set forth in this
Section 5.8 or as disclosed in Section 5.8 of the FNIS Disclosure Schedule, and
(ii) for changes since July 17, 2002 resulting from the grant of stock options
under FNIS's stock incentive plans in the Ordinary Course of Business and the
exercise of stock options outstanding on such date, there are no outstanding
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(x) shares of capital stock or other voting securities of FNIS, (y) securities
of FNIS convertible into or exchangeable for shares of capital stock or voting
securities of FNIS, and (z) options or other rights to acquire from FNIS, and no
obligation of FNIS to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of FNIS
(the items in clauses (x), (y) and (z) being referred to collectively as the
"FNIS Securities"). There are no outstanding obligations of FNIS or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any FNIS Securities.
(c) The FNIS Common Shares to be issued upon conversion of the
Merger Shares pursuant to Article III hereof have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will have
been validly issued, fully paid and nonassessable and free of any preemptive or
other similar right.
Section 5.9 FNIS SEC Documents; Nasdaq Listing.
(a) FNIS has filed, and has made available to the Company, the
FNIS SEC Documents. FNIS has filed all reports, filings, registration statements
and other documents required to be filed by it with the SEC. No Subsidiary of
FNIS is required to file any form, report, registration statement or prospectus
or other document with the SEC.
(b) As of the respective dates they were filed, the FNIS SEC
Documents were prepared, and all forms, reports and documents filed with the SEC
after the date of this Agreement and prior to the date of Closing will be
prepared, in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be.
(c) No FNIS SEC Document contained, nor will any forms,
reports and documents filed after the date of this Agreement and prior to the
date of Closing contain, any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(d) Except as set forth on Section 5.9(d) of the FNIS
Disclosure Schedule (i) the FNIS Common Shares is listed and traded on The
Nasdaq National Market and FNIS is in full compliance with all applicable
listing and maintenance requirements of The Nasdaq National Market, and (ii)
FNIS has never received any notification of de-listing or any other proceedings
or investigations by The Nasdaq National Market and there exists no reasonable
basis for any such proceeding or investigation.
Section 5.10 Financial Statements. FNIS has delivered to the Company
true, correct and complete copies of the audited consolidated balance sheets of
FNIS as of December 31, 2000 and 2001 and the related consolidated audited
statements of operations, stockholders' equity, and cash flows for each of the
three years ended December 31, 2001, together with all related notes thereto,
accompanied by the unqualified opinion of KPMG LLP, and no changes have been
made thereto since the date of delivery. FNIS has also delivered to the Company
true, correct and complete copies of the unaudited condensed consolidated
balance sheet of FNIS as of March 31, 2002 and the related condensed
consolidated statements of earnings, stockholders' equity and cash flows for the
three months ended March 31, 2002 and 2001. The audited and unaudited financial
statements of FNIS are referred to collectively herein as the "FNIS Financial
Statements". The FNIS Financial Statements, (i) present fairly and accurately
the consolidated financial position of FNIS and its
29
Subsidiaries for the periods then ended and their consolidated results of
operations, stockholders' equity, and cash flows for the periods then ended and
(ii) were prepared in accordance with GAAP consistently applied.
Section 5.11 No Undisclosed Liabilities. There are no liabilities of
FNIS of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, in each case, other than:
(i) liabilities or obligations disclosed or provided
for in the FNIS Financial Statements; or
(ii) liabilities or obligations incurred in the
Ordinary Course of Business of FNIS arising after March 31, 2002.
Section 5.12 Litigation. Except as disclosed in Section 5.12 of the
FNIS Disclosure Schedule or in the FNIS SEC Documents, there is no action, suit,
investigation, arbitration or proceeding pending, or to the Knowledge of FNIS
threatened, against, FNIS or any of its Subsidiaries, or relating to the
transactions contemplated by this Agreement or any of their respective assets or
properties before any court, arbitrator or Governmental Entity that,
individually or in the aggregate, would have a FNIS Material Adverse Effect, nor
is FNIS aware of any facts or circumstances which could reasonably lead to or
provide the basis for any such action.
ARTICLE VI
REPRESENTATIONS OF FNIS AND FIRST MERGER SUB
FNIS and First Merger Sub represents and warrants to the Company as of
the date of this Agreement, and provided that the First Merger is closed, as of
the time of filing of the Articles of First Merger, that:
Section 6.1 Organization of Merger Sub. First Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado.
Section 6.2 Authorization and Approvals. This Agreement has been duly
and validly authorized by all necessary corporate action of First Merger Sub,
and, except for filing Articles of First Merger with the Colorado Secretary of
State, no further consents by, or filing with, any Governmental Entity is
required in connection with the execution and delivery by First Merger Sub of
this Agreement, or the consummation by First Merger Sub of the transactions
contemplated hereby.
Section 6.3 No Violations. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any provision of the certificate of incorporation or the bylaws of First
Merger Sub.
Section 6.4 Equity. Each share of capital stock of First Merger Sub,
when issued pursuant to this Agreement, shall be duly and validly issued, fully
paid and nonassessable.
Section 6.5 Business Operations. First Merger Sub has never had any
business operations, debts, obligations, liabilities, commitments or Contracts,
other than those provided for in this Agreement or incurred in connection with
the transactions contemplated in this Agreement.
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ARTICLE VII
COVENANTS OF THE COMPANY
The Company agrees that:
Section 7.1 The Company Interim Operations. Except as set forth in the
Company Disclosure Schedule or as otherwise expressly contemplated hereby,
without the prior consent of FNIS, from the date hereof until the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, conduct
their business in all material respects in the ordinary course consistent with
past practice and custom and in accordance with all applicable laws, rules and
regulations, and shall use commercially reasonable efforts to (i) preserve
intact its present business organization and assets, (ii) maintain in effect all
material licenses, approvals and authorizations, including, without limitation,
all material licenses and permits that are required by applicable Laws and
Environmental Laws for the Company or any of its Subsidiaries to carry on its
business and (iii) preserve existing relationships and goodwill with its
employees, its agents, and its customers, clients, lenders, vendors, suppliers
and others having material business relationships with it. Without limiting the
generality of the foregoing, except as set forth in Section 7.1 of the Company
Disclosure Schedule or as otherwise expressly contemplated by this Agreement
(including the Exhibits hereto), from the date hereof until the Effective Time,
without the prior consent of FNIS, the Company shall not, nor shall it permit
any of its Subsidiaries to:
(a) amend its articles of incorporation or by-laws;
(b) take any action that would prevent or materially impair
the ability of the Company to consummate the transactions contemplated by this
Agreement, including actions that would be reasonably likely to prevent or
materially impair the ability of the Company, FNIS or any of their Subsidiaries
to obtain any consent, registration, approval, permit or authorization required
to be obtained from any Governmental Entity prior to the Effective Time in
connection with the execution and delivery of this Agreement and the
consummation of the First Merger and the other transactions contemplated by this
Agreement;
(c) split, combine or reclassify any shares of capital stock
of the Company or any less-than-wholly-owned Subsidiary of the Company or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities or any securities of any of its
Subsidiaries;
(d) (i) issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such capital stock or any such convertible securities,
other than the issuance of Company Common Shares upon the exercise of presently
outstanding vested stock options or presently outstanding warrants (other than
warrants to be terminated as of the Closing as provided for in this Agreement);
(ii) amend in any material respect any material term of any outstanding security
of the Company or any of its Subsidiaries or (iii) consent, including consent by
the applicable committee, to any transfer of a Company Option;
(e) other than in connection with transactions permitted by
Section 7.1(f), incur any capital expenditures or any obligations or liabilities
in respect thereof, except for those
31
(i) contemplated by the capital expenditure budgets for the Company and its
Subsidiaries, or (ii) incurred in the Ordinary Course of Business of the Company
and its Subsidiaries;
(f) except for acquisitions in the Ordinary Course of Business
of the Company and its Subsidiaries consistent with past practice, acquire
(whether pursuant to merger, stock or asset purchase or otherwise) in one
transaction or series of related transactions any assets of or equity interests
in any Person;
(g) sell, lease, encumber or otherwise dispose of any assets,
other than (i) in the Ordinary Course of Business consistent with past practice,
(ii) equipment and property no longer used in the operation of the Company's
business, and (iii) sales or other dispositions of assets related to
discontinued operations of the Company or any of its Subsidiaries;
(h) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others or request any advances in respect of,
or make any drawdowns on, any existing indebtedness;
(i) amend, modify or terminate any material contract,
agreement or arrangement of the Company or any of its Subsidiaries or otherwise
waive, release or assign any material rights, claims or benefits of the Company
or any of its Subsidiaries thereunder;
(j) (i) except in the Ordinary Course of Business consistent
with past practice, or as required by law or by an agreement existing on the
date hereof, increase the amount of compensation of any director or executive
officer or make any increase in or commitment to increase any employee benefits,
(ii) except as required by law or by an agreement existing on the date hereof,
adopt any severance program or grant any material severance or termination pay
to any director, officer or employee of the Company or any of its Subsidiaries
(provided that FNIS shall not unreasonably withhold its consent as required
under this Section 7.1), (iii) adopt or implement any employee retention program
or other incentive arrangement not in existence on the date hereof, (iv) adopt
any additional employee benefit plan or, except in the Ordinary Course of
Business, make any material contribution to such existing plan, or (v) except as
may be required by law or pursuant to any agreement existing on the date hereof,
amend in any material respect any Company Employee Plan;
(k) change the Company's (x) methods of accounting in effect
at December 31, 2001 and March 31, 2002, except as required by changes in GAAP
or by Regulation S-X of the Exchange Act, as concurred in by its independent
public accountants or (y) fiscal year;
(l) other than in the Ordinary Course of Business, make any
tax election or enter into any settlement or compromise of any tax liability
that in either case is material to the business of the Company and its
Subsidiaries, taken as a whole;
(m) pay, discharge, settle or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than (x) an insurance claim arising in the Ordinary Course of Business,
and (y) ordinary course repayment of indebtedness or payment of contractual
obligations when due;
(n) take any action that would cause any of its
representations and warranties herein to become untrue in any material respect;
32
(o) take any action to change, or that would reasonably likely
to result in a change upon the execution and delivery of this Agreement or the
consummation of the transactions contemplated herein, to any Option Condition,
including without limitation accelerating the vesting under any options or
warrants of the Company;
(p) enter into any insurance policy covering the directors or
officers of the Company other than an insurance policy for the benefit of the
directors and officers of the Company, provided that (i) the aggregate premium
over the life of such policy shall in no event exceed $450,000, (ii) the policy
shall cover only liability of such directors and officers arising in their
capacities as such with the Company and (iii) such policy shall be for a
duration of no longer than six years following the Effective Time; and
(q) agree, resolve or otherwise commit to do any of the
foregoing.
Section 7.2 Shareholder Meeting. The Company shall cause a meeting of
its shareholders (the "Company Shareholders Meeting") to be duly called and held
for the purpose of obtaining the Company Shareholder Approval as soon as
reasonably practicable after the Registration Statement is declared effective
under the Securities Act. Except as provided in the next sentence, (a) the
Company's Board of Directors shall recommend approval and adoption by its
shareholders of this Agreement (the "Company Recommendation"), and (b) the
Company shall use its reasonable best efforts to solicit the Company Shareholder
Approval. Without limiting the generality of the foregoing, the Company agrees
that its obligations under this Section 7.2 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Proposal for a Competing Transaction (as defined below). The Board of
Directors of the Company shall be permitted to (i) not recommend to the
Company's shareholders that they give the Company Shareholder Approval or (ii)
at any time prior to receipt of Company Shareholder Approval, withdraw or modify
in a manner materially adverse to FNIS the Company Recommendation, only if the
Board of Directors of the Company by a majority vote determines in its good
faith judgment (after consultation with its outside legal counsel) that it is
necessary to so withdraw or modify the Company Recommendation to comply with its
fiduciary duties under applicable Law.
Section 7.3 No Solicitation; Board Recommendation.
(a) The Company agrees that, during the period beginning on
the date of this Agreement and ending on and including September 30, 2002 or the
earlier termination of this Agreement pursuant to Article XI, it shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director, employee, investment banker, attorney, accountant, affiliate,
agent or other advisor or representative of the Company or any of its
Subsidiaries, directly or indirectly, to (and the Company will instruct its
officers, directors, employees, investment bankers, attorneys, affiliates,
accountants, agents and other advisors and representatives of the Company and
each of its Subsidiaries not to) (i) take any action to submit, solicit,
initiate, discuss, facilitate or encourage the submission of any Proposal from
any Person relating to a sale, lease or encumbrance of all or any material
portion of the business or assets of the Company and/or of its Subsidiaries
(whether by merger, sale of stock or assets, tender offer or otherwise), or
issue, deliver or sell, or authorize the issuance, delivery or sale of, any
shares of its capital stock of any class or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such capital
stock or any such convertible securities, other than to FNIS and/or its
Subsidiaries and the issuance of Company Common Shares upon the exercise of
presently outstanding vested stock options (which shall be deemed to include the
Special Options granted on May 4, 2001 as set forth in Section 4.5 of
33
the Company Disclosure Schedule) or presently outstanding warrants (other than
warrants to be terminated as of the Closing as provided for in this Agreement)
(collectively, a "Competing Transaction") (ii) engage in any negotiations or
discussions regarding, or furnish to any Person any non-public information with
respect to, or take any other action knowingly to facilitate any inquiries or
the making of any Proposal that constitutes, or may be reasonably expected to
lead to, any Competing Transaction, (iii) grant any waiver or release under any
standstill or similar agreement with respect to any class of the Company's
equity securities, (iv) except as required by the HSR Act or federal securities
laws, disclose to any Person other than FNIS and the Company's professional
advisors the material terms of the transactions contemplated hereby or of the
Letter of Intent by and between FNIS and the Company dated May 15, 2002, or (v)
other than in the manner contemplated by Section 7.3(d), enter into any
agreement with respect to any of the foregoing; provided, however, that the
Company may take any actions described in the foregoing clauses (i), (ii),
(iii), (iv) or (v) in respect of any Person who makes a Proposal for a Competing
Transaction, but only if (x) the Board of Directors of the Company by a majority
vote determines in its good faith judgment, that either (A) such Proposal
constitutes a Superior Proposal and provides written notice of termination of
this Agreement in accordance with Section 7.3(d) and Section 11.1, or (B) such
Proposal could reasonably be expected to result in a Superior Proposal, and (y)
prior to furnishing any non-public information to such Person, such Person shall
have entered into a confidentiality agreement with the Company on terms no less
favorable to the Company than the Mutual Confidentiality Agreement by and
between the Company and FNIS dated as of May 7, 2002 (the "Confidentiality
Agreement").
(b) Unless the Company's Board of Directors has previously
withdrawn, or is concurrently therewith withdrawing, the Company Recommendation,
neither the Company's Board of Directors nor any committee thereof shall
recommend any Superior Proposal to the Company shareholders.
(c) Immediately after receipt by the Company or any of its
Subsidiaries (or any of their respective directors, officers, agents or
advisors) of any Proposal for a Competing Transaction, any contacts concerning,
or any request for non-public information or for access to the properties, books
or records of the Company or any of its Subsidiaries or any request for a waiver
or release under any standstill or similar agreement, by any Person that has
made a Proposal for a Competing Transaction or indicates that it is considering
making a Proposal for a Competing Transaction, the Company shall notify FNIS (x)
that a Person may be considering making a Proposal for a Competing Transaction,
and (y) of the identity of such Person and, if a Proposal for a Competing
Transaction is made, of the material terms of such Proposal. The Company shall
keep FNIS reasonably informed of the status and material terms of any such
Proposal.
(d) Upon notice and in accordance with the terms of Section
11.1, the Company may terminate this Agreement at any time before the Company
Shareholder Approval is obtained if (w) the Company's Board of Directors shall
have authorized the Company, subject to the terms and conditions of this
Agreement, to enter into a binding agreement concerning a transaction that
constitutes a Superior Proposal, (x) the Company notifies FNIS that it intends
to enter into such agreement, specifying the material terms and conditions of
such agreement, (y) within three Business Days of receiving the notice described
in (x) above, FNIS fails to propose and agree to enter into a modification of
this Agreement such that the Board of Directors of the Company determines by a
majority vote in its good faith judgment that such Superior Proposal is no
longer a Superior Proposal and (z) the Company pays FNIS the fee contemplated by
Section 11.3(b).
34
Section 7.4 Voting Agreement. Concurrently with the execution and
delivery of this Agreement, the Company shall use its best efforts to cause to
be delivered to FNIS a Voting Agreement (the "Voting Agreement"), in the form of
Exhibit A to this Agreement, by the Principal Shareholders, whereby each such
shareholder agrees to vote in favor of the First Merger and all other
transactions contemplated by this Agreement.
Section 7.5 Affiliate Letters. Concurrently with the execution and
delivery of this Agreement, the Company shall use its best efforts to cause to
be delivered to FNIS an Affiliate Letter, in the form of Exhibit B to this
Agreement, by the Principal Shareholders (and such other shareholders of the
Company as determined by FNIS), whereby each such shareholder agrees to volume
restrictions, as required by Rule 145 promulgated under the Securities Act, on
the sale of FNIS Common Shares issued pursuant to the First Merger held by him.
ARTICLE VIII
COVENANTS OF FNIS
FNIS agrees that:
Section 8.1 FNIS Interim Operations. Except as set forth in Section 8.1
of the FNIS Disclosure Schedule or otherwise expressly contemplated by this
Agreement (including the Exhibits hereto), from the date hereof until the
Effective Time, without the prior consent of the Company (which consent shall
not be unreasonably withheld or delayed), FNIS shall not, nor shall it permit
any of its Subsidiaries to:
(a) take any action that would prevent or materially impair
the ability of FNIS to consummate the transactions contemplated by this
Agreement, including actions that would be reasonably likely to prevent or
materially impair the ability of FNIS, the Company or any of their Subsidiaries
to obtain any consent, registration, approval, permit or authorization required
to be obtained from any Governmental Entity prior to the Effective Time in
connection with the execution and delivery of this Agreement and the
consummation of the First Merger and the other transactions contemplated by this
Agreement;
(b) take any action that would cause any of its
representations and warranties herein to become untrue in any material respect;
and
(c) agree, resolve or otherwise commit to do any of the
foregoing.
Section 8.2 Stock Exchange Listing. FNIS shall use its reasonable best
efforts to cause the FNIS Common Shares to be issued in connection with the
First Merger or upon exercise of FNIS Options to be listed on The Nasdaq
National Market.
ARTICLE IX
COVENANTS OF FNIS AND THE COMPANY
The parties hereto agree that:
Section 9.1 Reasonable Best Efforts. Subject to the terms and
conditions hereof, each party will use reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws and regulations to consummate the
transactions contemplated by this Agreement as promptly as practicable after the
date hereof,
35
including (i) preparing and filing as promptly as practicable all documentation
to effect all necessary applications, notices, petitions, filings, tax ruling
requests and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the First Merger,
the Second Merger or any of the other transactions contemplated by this
Agreement and (ii) taking all reasonable steps as may be necessary to obtain all
such material consents, waivers, licenses, registrations, permits,
authorizations, tax rulings, orders and approvals. In furtherance and not in
limitation of the foregoing, each party hereto agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby as promptly as practicable after the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable, and (iii)
the defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any Governmental Entity vacated or reversed. Nothing in this Section
9.1 shall require any of the Company and its Subsidiaries or FNIS and its
Subsidiaries to sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or agree to sell, hold separate or otherwise
dispose of or conduct their business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of the Company, FNIS or
their respective Subsidiaries or the conduct of their business in a specified
manner, whether as a condition to obtaining any approval from a Governmental
Entity or any other Person or for any other reason, if such sale, holding
separate or other disposition or the conduct of their business in a specified
manner either (x) is not conditioned on the Closing or (y) would reasonably be
expected to have a Material Adverse Effect on the First Surviving Corporation,
taken as a whole, after giving effect to the First Merger (any such sale,
holding separate or other disposition or conduct of business referred to (x) or
(y) shall be referred to herein as a "Burdensome Condition").
Section 9.2 Certain Filings; Cooperation in Receipt of Consents.
(a) As promptly as practicable after the date hereof, the
Company and FNIS shall jointly prepare and file the Proxy Statement/Prospectus
and the Registration Statement, in which the Proxy Statement/Prospectus will be
included. Each of the Company and FNIS shall use its reasonable best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and to keep the Registration Statement
effective as long as is necessary to consummate the First Merger. The Company
shall mail the Proxy Statement/Prospectus to its shareholders as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act and, if necessary, after the Proxy Statement/Prospectus shall
have been so mailed, promptly circulate amended, supplemental or supplemented
proxy material and, if required in connection therewith, resolicit proxies. FNIS
shall also take any action (except to qualify to do business or to file a
general consent to service of process) required to be taken under any applicable
state securities or "blue sky" laws in connection with the issuance of FNIS
Common Shares in the First Merger, and the Company shall use its reasonable best
efforts to furnish all information concerning its directors, officers,
shareholders and business as may be reasonably requested by FNIS in connection
with any such action.
(b) No filing of, or any amendment or supplement to, the Proxy
Statement/Prospectus will be made by the Company without providing FNIS the
opportunity to review and comment thereon. Each party will advise the other
party, promptly after it receives notice
36
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the FNIS Common Shares issuable in connection
with the First Merger for offering or sale in any jurisdiction, or any request
by the SEC for amendment of the Proxy Statement/Prospectus or comments thereon
and responses thereto or requests by the SEC for additional information. If at
any time prior to the Effective Time any information relating to either party,
or any of their respective Affiliates, officers or directors should be
discovered by the Company or FNIS, that should be set forth in an amendment or
supplement to the Registration Statement or the Proxy Statement/Prospectus, so
that either of such documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party that discovers such information shall promptly notify the
other party hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
law or regulation, disseminated to the shareholders of the Company and FNIS.
(c) The Company shall use its reasonable best efforts to cause
to be delivered to FNIS two letters from the Company's independent public
accountants, one dated the date on which the Registration Statement shall become
effective and one dated the date of the Effective Time, each addressed to the
Company and FNIS, in form and substance reasonably satisfactory to FNIS and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement. FNIS shall use its reasonable best efforts to cause to
be delivered to the Company two letters from FNIS's independent public
accountants, one dated the date on which the Registration Statement shall become
effective and one dated the date of the Effective Time, each addressed to the
Company and FNIS, in form and substance reasonably satisfactory to the Company
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(d) The Company and FNIS shall cooperate with one another in
(i) determining whether any other action by or in respect of, or filing with,
any Governmental Entity is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated hereby and
(ii) seeking any such other actions, consents, approvals or waivers or making
any such filings, furnishing information required in connection therewith and
seeking promptly to obtain any such actions, consents, approvals or waivers.
Each party shall permit the other party to review any communication given by it
to, and shall consult with each other in advance of any meeting or conference
with, any Governmental Entity or, in connection with any proceeding by a private
party, with any other Person, and to the extent permitted by the applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences, in each case in
connection with the transactions contemplated hereby.
Section 9.3 Public Announcements. Each party shall obtain the consent
of the other party prior to issuing any press release or public statement with
respect to this Agreement and the transactions contemplated hereby, except as
may be required by applicable law or any listing agreement with Nasdaq.
37
Section 9.4 Access to Information; Notification of Certain Matters.
(a) From the date hereof until the Effective Time and subject
to applicable law, the Company and FNIS shall (i) give to the other party, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of such party,
(ii) furnish or make available to the other party, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request and
(iii) instruct its employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with the reasonable requests of the
other party in its investigation. Any investigation pursuant to this Section
9.4(a) shall be conducted in such manner as not to interfere unreasonably with
the conduct of the business of the other party. All such information shall be
governed by the terms of the Confidentiality Agreement. No information or
knowledge obtained in any investigation pursuant to this Section 9.4(a) shall
affect or be deemed to modify any representation or warranty made by any party
hereunder.
(b) Each party hereto shall give notice to each other party
hereto, as promptly as practicable after the event giving rise to the
requirement of such notice, of:
(i) any communication received by such party from, or
given by such party to, any Governmental Entity in connection with any of the
transactions contemplated hereby;
(ii) 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; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries that, if
pending on the date of this Agreement, would have been required to have been
disclosed, or that relate to the consummation of the transactions contemplated
by this Agreement; provided, however, that the delivery of any notice pursuant
to this Section 9.4(b) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 9.5 Further Assurances. At and after the Effective Time, the
officers and directors of the First Surviving Corporation, or in the case of a
Double Merger, the Second Surviving Corporation, will be authorized to execute
and deliver, in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company, any other actions and things to vest, perfect or confirm of record or
otherwise in the First Surviving Corporation, or in the case of a Double Merger,
the Second Surviving Corporation, any and all right, title and interest in, to
and under any of the rights, properties or assets of the Company acquired or to
be acquired by the First Surviving Corporation as a result of, or in connection
with, the First Merger, or, in the event of a Double Merger, by the Second
Surviving Corporation as a result of, or in connection with, the Second Merger.
Section 9.6 Control of Other Party's Business. Nothing contained in
this Agreement shall give FNIS, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Nothing contained
in this Agreement shall give the Company, directly or indirectly, the right to
control or direct FNIS's operations prior to the Effective Time. Prior to the
Effective Time, each of FNIS and the Company shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
its respective operations.
38
Section 9.7 Tax Treatment of Transaction. In the event of a Double
Merger, the Parties hereto agree and covenant to treat and report the Double
Merger for income tax purposes as a reorganization under Section 368 of the Code
and its related provisions.
ARTICLE X
CONDITIONS TO THE MERGER
Section 10.1 Conditions to the Obligations of Each Party. The
obligations of the Company and FNIS to consummate the First Merger are subject
to the satisfaction of the following conditions:
(a) the Company Shareholder Approval shall have been obtained;
(b) the FNIS Common Shares to be issued in the First Merger
shall have been approved for listing on The Nasdaq National Market;
(c) (i) the Registration Statement shall have become effective
in accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose shall have been initiated
by the SEC and not concluded or withdrawn and (ii) all state securities or "blue
sky" authorizations necessary to carry out the transactions contemplated hereby
shall have been obtained and be in effect;
(d) any applicable waiting period under the HSR Act relating
to the First Merger and/or the Second Merger shall have expired or been earlier
terminated without the imposition of any Burdensome Condition;
(e) no Governmental Entity of competent authority or
jurisdiction shall have issued any order, injunction or decree, or taken any
other action, that is in effect and restrains, enjoins or otherwise prohibits
the consummation of the First Merger or, in the event of a Double Merger, the
consummation of the Second Merger; and
(f) the parties shall have obtained or made all consent,
approvals, actions, orders, authorizations, registrations, declarations,
announcements and filings from and with all Governmental Entities as
contemplated by Section 4.3 and Section 4.4, which if not obtained or made would
render consummation of the First Merger, and, in the event of a Double Merger,
the Second Merger, illegal.
Section 10.2 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the First Merger are subject to the
satisfaction of the following further conditions:
(a) (i) FNIS shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
time of the filing of the Articles of First Merger, (ii) the representations and
warranties of FNIS contained in this Agreement (without giving effect to any
materiality, Material Adverse Effect or similar qualifications included therein)
shall have been true and correct when made and at and as of the time of the
filing of the Articles of First Merger as if made at and as of such time (except
to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case it shall be true and correct as of such date),
except for such inaccuracies as would not be reasonably likely, individually or
in the aggregate, to have a FNIS Material Adverse Effect, and (iii) the Company
shall have received a certificate signed
39
by the Chief Executive Officer or Chief Financial Officer of FNIS to the
foregoing effect and with respect to the completion of each condition set forth
in this Section 10.2 to the extent such condition is an action to be taken by
FNIS;
(b) In the event of FNIS's election of a Combination Cash and
Stock Exchange, the Company shall have received an opinion of Ernst & Young LLP
(or other tax advisor acceptable to the Company) in form and substance
reasonably satisfactory to the Company, on the basis of certain facts,
representations and reasonable assumptions set forth in such opinion, dated as
of the date of the filing of the Articles of First Merger, to the effect that
the Double Merger will be treated for federal income tax purposes as a 368
Reorganization. In rendering such opinion, such tax advisor shall be entitled to
rely upon customary representations of officers of the Company and FNIS in form
and substance reasonably satisfactory to such tax advisor and other reasonable
assumptions set forth therein; and
(c) The Company shall be satisfied with the results of the due
diligence investigation conducted by the Company and its representatives
pursuant to Section 9.4(a) (which condition shall not be deemed waived as a
result of or otherwise affected by any disclosure made by FNIS to the Company,
including in the FNIS Disclosure Schedule, on or prior to the date of this
Agreement); provided, however, that this condition shall be deemed satisfied if
this Agreement is not terminated within thirty (30) days of the date of this
Agreement or in the event that FNIS elects the All Cash Consideration.
Section 10.3 Conditions to the Obligations of FNIS. The obligations of
FNIS to consummate the First Merger are subject to the satisfaction of the
following further conditions:
(a) (i) The Company shall have performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the time of filing of the Articles of First Merger, (ii) the
representations and warranties of the Company contained in this Agreement
(without giving effect to any materiality, Material Adverse Effect or similar
qualifications included therein) shall have been true and correct when made and
at and as of the time of the filing of the Articles of First Merger as if made
at and as of such time (except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case it shall be true and
correct as of such date), except for such inaccuracies as would not be
reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect, and (iii) FNIS shall have received a certificate signed by the
Chief Executive Officer or Chief Financial Officer of the Company to the
foregoing effect and with respect to the completion of each condition set forth
in this Section 10.3 to the extent such condition is an action to be taken by
the Company;
(b) FNIS shall be satisfied with the results of the due
diligence investigation conducted by FNIS and its representatives pursuant to
Section 9.4(a) (which condition shall not be deemed waived as a result of or
otherwise affected by any disclosure made by the Company or the Indemnifying
Shareholders to FNIS, including in the Company Disclosure Schedule, on or prior
to the date of this Agreement); provided, however, that this condition shall be
deemed satisfied if this Agreement is not terminated within thirty (30) days of
the date of this Agreement;
(c) The aggregate amount of Dissenting Shares shall not exceed
two percent (2%) of the total number of Company Common Shares, on a fully
diluted basis, issued and outstanding immediately prior to the Effective Time;
40
(d) Since the date of the Company balance sheet included in
the Company 10-Q, there shall not have occurred any change in the financial
condition, business or operations of the Company and its Subsidiaries, taken as
a whole, that would be reasonably likely to have a Company Material Adverse
Effect;
(e) Each Person set forth on Schedule 10.3(e) hereof shall
have executed and delivered to FNIS an employment agreement in a form acceptable
to FNIS. Such employment agreement shall contain, among other terms, customary
salary and bonus provisions, as well as provisions protecting the Company's
proprietary information and prohibiting such Person from soliciting the
Company's employees or customers;
(f) The Company shall have obtained or made all consents,
approvals, actions, orders, authorizations, registrations, declarations,
announcements and filings contemplated by Section 4.3 and Section 4.4 which if
not obtained or made would be reasonably likely to have a Material Adverse
Effect on the First Surviving Corporation, after giving effect to the First
Merger or, in the event of a Double Merger, a Material Adverse Effect on the
Second Surviving Corporation, after giving effect to the Second Merger.
Notwithstanding anything to the contrary herein, with respect to the agreements
set forth on Section 4.18 of the Company Disclosure Schedule and Schedule
10.3(f) hereof, FNIS and the parties to such agreements shall have entered into
written agreements which shall provide for the assignment, cancellation or other
resolution of the status of such agreements upon the consummation of the
transactions contemplated herein, including the completion of the Double Merger,
acceptable to FNIS in its sole discretion;
(g) The Company shall have completed, to FNIS's reasonable
satisfaction, the actions (i) set forth in Section 3.5(a) and (ii) set forth on
Schedule 10.3(g) with respect to the stock option plans and agreements and
warrants set forth therein, and shall have delivered to FNIS such amendment,
resolution, agreement or other evidence as reasonably requested by FNIS to
verify the completion of such actions; and
(h) ▇▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, shall have
delivered to FNIS a legal opinion, in customary form and dated as of the date of
the Closing, stating that there are no laws or regulations under the CBCA or
other Colorado state law or regulation that would require any condition to the
consummation of the transactions contemplated herein, including without
limitation the imposition of a waiting period or requirement of a board or
stockholder approval, other than such actions or conditions that are expressly
set forth in this Agreement.
ARTICLE XI
TERMINATION
Section 11.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time by written notice by the terminating party to the
other party (except if such termination is pursuant to Section 11.1(a)), whether
before or after the Company Shareholder Approval (except in the case of Section
11.1(c)(iii)) shall have been obtained:
(a) by mutual written agreement of FNIS and the Company;
(b) by either FNIS or the Company, if
(i) the First Merger shall not have been consummated
by September 30, 2002 (the "End Date"); provided, however, that the right to
terminate this Agreement under this
41
Section 11.1(b)(i) shall not be available to any party whose breach of any
provision of or whose failure to perform any obligation under this Agreement has
been the cause of, or has resulted in, the failure of the First Merger to occur
on or before the End Date; provided, further, that the parties may extend the
End Date by mutual written agreement;
(ii) there shall be any law or regulation that makes
consummation of the First Merger, or, in the event of a Double Merger, the
Second Merger, illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Entity having competent jurisdiction
enjoining the Company or FNIS from consummating the First Merger, or, in the
event of a Double Merger, the Second Merger, is entered and such judgment,
injunction, judgment or order shall have become final and nonappealable and,
prior to such termination, the parties shall have used their respective
reasonable best efforts to resist, resolve or lift, as applicable, such law,
regulation, judgment, injunction, order or decree; provided, however, that the
right to terminate this Agreement under this Section 11.1(b)(ii) shall not be
available to any party whose breach of any provision of or whose failure to
perform any obligation under this Agreement has been the cause of such law,
regulation, judgment, injunction, order or decree; or
(iii) at the Company Shareholders Meeting (including
any adjournment or postponement thereof), the Company Shareholder Approval shall
not have been obtained;
(c) by the Company, (i) (A) if a breach of or failure to
perform any covenant or agreement on the part of FNIS set forth in this
Agreement shall have occurred which would cause the conditions set forth in
Section 10.2(a)(i) or 10.2(a)(iii) to not be satisfied, or if there is a breach
of the representations and warranties made by FNIS as of the date of this
Agreement or an event or circumstance arising after the date of this Agreement
which would cause the conditions in Section 10.2(a)(ii) or 10.2(a)(iii) to not
be satisfied, and (B) either such conditions shall be incapable of being
satisfied by the End Date or such breach, failure to perform or inaccuracy has
not been cured within 10 days after notice of the same has been given by the
Company to FNIS; (ii) if the Company is not satisfied with the results of the
due diligence investigation of FNIS conducted by the Company or its
representatives as contemplated by Section 9.4(a) hereof and the Company shall
have provided FNIS written notice of termination with thirty (30) days of the
date of this Agreement; provided, however, that if FNIS delivers to the Company
a written notice that it will elect the All Cash Consideration payment under
this Agreement within ten (10) Business Days from receipt of the Company's
notice of termination, this Agreement shall continue in full force and effect
and the Company's notice of termination shall have no force or effect; or (iii)
as contemplated by Section 7.3(d); or
(d) by FNIS, (i) if the Company's Board of Directors shall
have (A) amended, modified, withdrawn, conditioned or qualified the Company
Recommendation in a manner materially adverse to FNIS, (B) recommended any
Proposal for a Competing Transaction to the Company's shareholders, and/or (C)
failed to make the Company Recommendation; (ii) (A) if a breach of or failure to
perform any covenant or agreement on the part of the Company set forth in this
Agreement shall have occurred which would cause the conditions set forth in
Section 10.3(a)(i) or 10.3(a)(iii) to not be satisfied, or if there is a breach
of the representations and warranties made by the Company as of the date of this
Agreement or an event or circumstance (a "Subsequent Causal Event or
Circumstance") arising after the date of this Agreement which would cause the
conditions in Section 10.3(a)(ii) or 10.3(a)(iii) to not be satisfied, and (B)
either such conditions shall be incapable of being satisfied by the End Date or
such breach, failure to perform or inaccuracy has not been cured within 10 days
after notice of the same has been given by FNIS to the Company; (iii) if FNIS is
not satisfied with the results of the due diligence investigation of the Company
conducted by FNIS or its
42
representatives as contemplated by Section 9.4(a) hereof and FNIS shall have
provided the Company written notice of termination with thirty (30) days of the
date of this Agreement; (iv) if the Average FNIS Common Share Price is less than
twenty-five dollars ($25.00); or (v) if the Company shall have breached or
failed to perform any obligation under Section 7.3.
Section 11.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 11.1 (including any such termination by way of Section
7.3(d)), there shall be no liability or obligation on the part of FNIS or the
Company, or any of their respective officers, directors, stockholders, agents or
Affiliates, except as set forth in Section 11.3, except that the provisions of
Sections 11.2, 11.3, 13.1, 13.3, 13.4, 13.5, 13.6, 13.7, 13.8, 13.9 and 13.10 of
this Agreement shall remain in full force and effect and survive any termination
of this Agreement. Notwithstanding anything to the contrary contained in this
Agreement, neither the Company nor FNIS shall be relieved of or released from
any liabilities or damages arising out of its material breach of or material
failure to perform its obligations under this Agreement. Notwithstanding
anything to the contrary herein, the maximum amount of payment for liabilities
or damages (excluding the fees and expenses payable under Section 11.3(a)(i))
payable by either FNIS or the Company as a result of its breach of or failure to
perform its obligations under this Agreement shall be One Million Dollars
($1,000,000), which amount shall be paid in lieu of any obligation under this
Agreement and as liquidated damages and not as a penalty or forfeiture;
provided, however, that in the event that the Company is required to pay the
Termination Fee set forth in Section 11.3(b), such Termination Fee (and the fees
and expenses payable under Section 11.3(a)(i)), shall instead be the Company's
sole liability to FNIS for any breach or failure to perform the Company's
obligations under this Agreement.
Section 11.3 Termination Fee and Expenses.
(a) Whether or not the First Merger and/or Second Merger is
consummated, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except that (i) each of the Company and FNIS shall bear and pay
(A) one-half of the fees required in connection with filings in compliance with
any applicable requirements of the HSR Act, and (B) one-half of the fees
required in connection with filing the Registration Statement and Proxy
Statement/Prospectus, and (ii) if the First Merger is consummated, the First
Surviving Corporation shall pay, or cause to be paid, all state, local, foreign
or provincial sales, use, real property, transfer, stock transfer or similar
taxes (including any interest or penalties with respect thereto) attributable to
the First Merger.
(b) The Company shall pay FNIS the Termination Fee (as
hereinafter defined) if this Agreement is terminated solely as follows:
(i) if the Company shall terminate this Agreement
pursuant to Section 11.1(c)(iii) or if FNIS shall terminate this Agreement
pursuant to Section 11.1(d)(v);
(ii) if either party shall terminate this Agreement
pursuant to Section 11.1(b)(iii) due to a failure to obtain the Company
Shareholder Approval, and either (i) one or more of the Principal Shareholders
are in breach of the Voting Agreement or has otherwise failed to vote all shares
of the Company voting capital stock, for which he or it has voting power, in
favor of the Double Merger or (ii) the Company shall have breached any of its
representations and warranties or failed to perform any of its obligations under
this Agreement which results directly or indirectly in the failure to obtain the
Company Shareholder Approval;
43
(iii) if FNIS shall terminate this Agreement pursuant
to Section 11.1(d)(i); or
(iv) if FNIS shall terminate this Agreement pursuant
to Section 11.1(d)(ii), and, (i) within twelve (12) months of such termination,
the Company shall engage in any negotiations or discussions with any third party
regarding a Takeover and (ii) within twenty four (24) months of such termination
the Company completes a Takeover with such third party or such third party's
Affiliates. Notwithstanding anything to the contrary, this Section 11.1(b)(iv)
shall not apply, and the Company shall not be obligated to pay the Termination
Fee, if FNIS terminates this Agreement under Section 11.1(d)(ii) pursuant to a
Subsequent Causal Event or Circumstance, where (i) the representations and
warranties made inaccurate by such Subsequent Causal Event or Circumstance were
true, complete and accurate as of the date of this Agreement (or as of any other
date specified in such representations and warranties), (ii) neither the Company
nor any of the Indemnifying Shareholders had Knowledge as of the date of this
Agreement of any fact, matter, event or circumstance underlying or directly or
indirectly contributing to the Subsequent Causal Event or Circumstance, where
the fact that such Subsequent Causal Event or Circumstance could occur was
reasonably foreseeable based on such fact, matter, event or circumstance, (iii)
such Subsequent Causal Event or Circumstance was not the result of any act or
omission by the Company or any of the Indemnifying Shareholders or otherwise the
result of a breach of the Company's obligations under this Agreement, and (iv)
the Company shall have provided FNIS notice of such Subsequent Causal Event or
Circumstance within three (3) Business Days of the Company obtaining Knowledge
of such Subsequent Causal Event or Circumstance and the Company shall have used
its best efforts to cure any and all inaccuracies in the representations and
warranties caused by such Subsequent Causal Event or Circumstance.
(c) "Termination Fee" means Three Million Dollars
($3,000,000).
(d) The Termination Fee required to be paid pursuant to
Section 11.3(b) shall be paid prior to, and shall be a pre-condition to the
effectiveness of, termination of this Agreement pursuant to Section
11.1(c)(iii). Any other payment of the Termination Fee required to be made
pursuant to Section 11.3(b) shall be made not later than two Business Days after
termination of this Agreement.
ARTICLE XII
INDEMNIFICATION
Section 12.1 Indemnity. Subject to the limitations and qualifications
of the indemnification set forth below in Section 12.2, the Indemnifying
Shareholder shall jointly and severally indemnify and hold harmless FNIS, the
First Surviving Corporation and/or the Second Surviving Corporation (each an
"Indemnified Party" and, collectively, the "Indemnified Parties") in respect of
any losses, expenses, liabilities or other damages, including, without
limitation, reasonable attorneys' fees, accountants' fees, and all other
reasonable costs and expenses of litigation, investigation, defense or
settlement of claims (including costs of all appeals related thereto) or threats
thereof and amounts paid in settlement to the extent of the amount of such
losses, expenses, liabilities or other damages (collectively, "Damages") that an
Indemnified Party incurs by reason of any breach by any one or more of the
Indemnifying Shareholders of any representation or warranty of such Indemnifying
Shareholder contained herein.
44
Section 12.2 Limitations and Qualifications.
(a) Notwithstanding anything else set forth herein, an
Indemnified Party shall not otherwise be entitled to any indemnification under
this Article XII unless and until the Indemnified Parties shall have incurred
Damages of at least an amount equal to the sum of $200,000 (the "Basket
Amount"), in the aggregate, in which case an Indemnifying Party shall only be
liable to provide indemnification equal to the proportion (as provided in clause
(c) below) of the amount of the cumulative Damages, including the Basket Amount.
(b) The parties hereto understand and agree that the indemnity
obligations of the Indemnifying Shareholders under this Article XII shall
terminate on the date 18 months following the Effective Time, except insofar as
a claim for indemnification under this Article XII has been asserted on or
before such date by an Indemnified Party delivering written notice thereof to
each Indemnifying Shareholder sought to be held liable under this Article XII,
and such claim has not been resolved in accordance with the terms of this
Agreement or otherwise.
(c) Notwithstanding anything else set forth herein, the total
cumulative portion of any or all Damages for which an Indemnifying Shareholder
may be held liable, and the total cumulative portion of any or all Damages for
which all of the Indemnifying Shareholders together may be held liable, under
this Article XII shall be a pro-rata portion of such Damages as calculated under
the following formula:
P = (S / OS) x D
Where:
P is the cumulative pro-rata portion of Damages for which an
Indemnifying Shareholder may be held liable, and the total
cumulative pro rata portion of Damages for which all of the
Indemnifying Shareholders together may be held liable;
S is the number of shares of the Company Common Shares owned by
all of the Indemnifying Shareholders Immediately prior to the
Effective Time;
OS is the sum of the Merger Shares and Dissenting Shares; and
D is the cumulative total of Damages.
(d) Each Indemnifying Shareholder shall have the right to use
up to the number of FNIS Common Shares received by such Indemnifying Shareholder
in the First Merger to satisfy any indemnification obligation imposed under this
Article XII by surrendering all or part of such shares to an Indemnified Party
entitled to such indemnification in lieu of the payment of cash, provided that
any remaining balance of Damages shall be payable in cash. For purposes of this
Article XII, such number of FNIS Common Shares shall be increased by any stock
dividends or stock splits and decreased for any reverse stock splits or similar
adjustments in the total number of shares outstanding and shall include any
securities into which the FNIS Common Shares may have been converted. For
purposes of calculating the amount of such indemnification obligation which may
be satisfied by transferring FNIS Common Shares to an Indemnified Party, each
FNIS Common Share shall be valued at the higher of the average closing price for
the stock on the Nasdaq National Market or exchange on which the shares may be
traded (if other than the Nasdaq National Market) for the ten trading days
preceding the date the stock is transferred or $13.75 per share. If the FNIS
Shares held by such Indemnifying Shareholder have been converted to another
security or if such shares or other
45
security have received a stock dividend or been subject to any stock splits and
or any reverse stock splits or similar adjustments in the total number of shares
outstanding, the foregoing $13.75 per share shall be adjusted proportionately
downward for any increase in the total number of shares outstanding and upward
for any decrease in the total number of shares outstanding as a result of such
actions.
(e) Nothing herein shall limit an Indemnified Party's rights
to seek recourse against any Person for claims based on fraud.
(f) Notwithstanding anything else set forth herein, an
Indemnifying Shareholder shall only be liable for Damages due to a breach by any
one or more of the Indemnifying Shareholders of any representation or warranty
of the Indemnifying Shareholders contained herein to the extent that any one or
more of the Indemnifying Shareholders had Knowledge that such representation or
warranty contained a material misstatement of fact or omitted a fact necessary
to make the representation or warranty not materially misleading as of the date
of this Agreement and as of the Effective Time (or at such earlier date as
specified in such representation or warranty).
(g) With respect to any claim for indemnification which is
asserted against an Indemnifying Shareholder and is not substantially sustained,
as determined by a court of competent jurisdiction or because the legal action
seeking enforcement of the claim is dismissed with prejudice or, if dismissed
without prejudice, is not refiled within the statute of limitations provided
under applicable law, or because the Indemnified Party withdraws or settles the
claim, then in such case the Indemnifying Shareholder shall be entitled to an
award, against the Indemnified Party or Indemnified Parties which asserted such
claim, of reasonable attorneys' fees, accountants' fees, and all other
reasonable costs and expenses of litigation, investigation, defense, and
settlement of the claim. In the event more than one Indemnified Party has
formally asserted such claim, each such Indemnified Party shall be liable for
such award in proportion to the respective size of the indemnification award
asserted by such party in relation to the aggregate size of the indemnification
awards asserted by all such Indemnified Persons with respect to such claim.
(h) This Article XII shall not become effective until the
Effective Time.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. Except as otherwise expressly set forth in
Section 7.3(c), all notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given,
if to FNIS, or
to First Merger Sub, to: Fidelity National Information Solutions, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
46
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
Factual Data Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective upon receipt.
Section 13.2 Survival of Representations, Warranties and Survival of
Certain Covenants after the Effective Time. The representations and warranties
made herein by the parties shall not survive beyond the Effective Time or a
termination of this Agreement in accordance with its terms; provided, however,
with respect to the Indemnifying Shareholders, the representations and
warranties shall survive solely with respect to the Indemnifying Shareholders'
indemnification obligations under Article XII. The covenants contained in
Sections 9.5, 9.7, 13.2, 13.4, 13.5, 13.6, 13.7, 13.8, 13.9 and 13.10 shall
survive the Effective Time.
Section 13.3 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 and FNIS or in
the case of a waiver, by the party against whom the waiver is to be effective;
provided, however, that after the Company Shareholder Approval, no such
amendment or waiver shall, without the further approval of such shareholders,
reduce or change the consideration to be received by holders of Company Shares
or be made that would require such approval under any applicable law, rule or
regulation.
(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.
Section 13.4 Successors and Assigns. 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
47
under this Agreement without the consent of the other party hereto. Any
purported assignment in violation hereof shall be null and void.
Section 13.5 Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of
Delaware
without reference to its principles of conflicts of laws.
Section 13.6 Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be signed in 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 the other party hereto.
No provision of this Agreement is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
Section 13.7 Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of
California or any California state court sitting in Orange County, or in the
United States District Court for the District of Colorado or any Colorado state
court sitting in Larimer County, Colorado, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 13.1 shall be deemed effective service of process on such
party.
Section 13.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 13.9 Enforcement. 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 13.10 Entire Agreement. This Agreement (together with the
Exhibits and Schedules hereto), and the Confidentiality Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof. All references to
"the date hereof" or words of like import referring to this Agreement shall mean
and be a reference to the date of this Agreement, and all representations and
warranties of the Company and FNIS contained in this Agreement shall be deemed
made as of the date hereof and, provided the First Merger is closed, as of
48
the date of filing of the Articles of First Merger (except in each case to the
extent any such representation or warranty expressly speaks as of an earlier
date).
[SIGNATURE PAGE IMMEDIATELY FOLLOWING]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
FIDELITY NATIONAL INFORMATION
SOLUTIONS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its Chief Executive Officer
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FACTUAL DATA CORP.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Its President
--------------------------------
FD ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Its Chief Executive Officer
--------------------------------
FACTUAL DATA ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Its Chief Executive Officer
--------------------------------
▇.▇. ▇▇▇▇▇▇, AN INDIVIDUAL
/s/ ▇.▇. ▇▇▇▇▇▇
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BY ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AS ATTORNEY-IN-FACT
FOR ▇.▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AN INDIVIDUAL
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AN INDIVIDUAL
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Schedules and exhibits to this Exhibit have not been filed; upon request, the
registrant will furnish supplementary to the Commission a copy of any omitted
schedule or exhibit.