STOCK PURCHASE AGREEMENT
BY AND AMONG
FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK,
NATIONAL TITLE INSURANCE
OF NEW YORK, INC.
AND
AMERICAN TITLE COMPANY
DATED AS OF MARCH 16, 1998
TABLE OF CONTENTS PAGE
RECITALS ............................................................... 1
INDEX OF EXHIBITS....................................................... iv
INDEX OF SCHEDULES...................................................... iv
ARTICLE I
Certain Definitions ............................................... 1
ARTICLE 2
The Basic Transaction.............................................. 6
2.1 Purchase and Sale of Company Stock ................................ 6
2.2 Consideration at Closing .......................................... 6
2.3 Certificate Delivery Requirement................................... 6
ARTICLE 3
Closing............................................................ 6
3.1. Closing ........................................................... 6
3.2 Seller's Deliveries at Closing .................................... 7
3.3 Buyer's Deliveries at Closing ..................................... 7
3.4 Conditions of Buyer ............................................... 7
3.5 Conditions of Seller and Company .................................. 9
ARTICLE 4
Representations and Warranties of Company and Shareholders ........ 10
4.1 Organization and Standing; Articles and Bylaws .................... 10
4.2 Authorization ..................................................... 10
4.3 Subsidiaries ...................................................... 10
4.4 Capitalization .................................................... 10
4.5 Financial Statements .............................................. 11
4.6 Material Contracts ................................................ 11
4.7 Assets Other Than Real Property.................................... 12
4.8 Real Property ..................................................... 12
4.9 No Conflicts ...................................................... 13
4.10 Litigation ........................................................ 13
4.11 Taxes ............................................................. 13
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4.12 Employees. ........................................................ 14
4.13 Consents .......................................................... 14
4.14 Operating Rights .................................................. 14
4.15 Compliance with Applicable Laws ................................... 15
4.16 Insurance ......................................................... 15
4.17 Absence of Changes ................................................ 15
4.18 Employee Plans .................................................... 16
4.19 Intellectual Property Rights ...................................... 16
4.20 Environment, Health and Safety .................................... 17
4.21 Certain Transactions............................................... 17
4.22 Bank Accounts; Powers of Attorney.................................. 17
4.23 Brokers' Fees ..................................................... 18
4.24 Full Disclosure ................................................... 18
ARTICLE 5
Representations and Warranties of Buyer............................ 18
5.1 Organization and Standing; Articles and Bylaws .................... 18
5.2 Authorization ..................................................... 18
5.3 No Conflicts ...................................................... 19
5.4 Governmental Consents.............................................. 19
5.5 Brokers' Fees ..................................................... 19
5.6 Full Disclosure ................................................... 19
ARTICLE 6
Conduct of Business Pending Closing ............................... 19
6.1 Qualification...................................................... 19
6.2 Ordinary Course ................................................... 19
6.3 Corporate Changes ................................................. 20
6.4 Indebtedness ...................................................... 20
6.5 Accounting......................................................... 20
6.6 Compliance with Legal Requirements ................................ 20
6.7 Disposition of Assets ............................................. 20
6.8 Compensation ...................................................... 20
6.9 Modification or Breach of Agreements; New Agreements .............. 21
6.10 Capital Expenditures............................................... 21
6.11 Consents .......................................................... 21
6.12 Maintenance of Insurance........................................... 21
6.13 Discharge.......................................................... 21
6.14 Claims............................................................. 21
6.15 Taxes and Tax Assessments ......................................... 21
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ARTICLE 7
Additional Covenants. ............................................. 22
7.1 Covenants of Seller and Company ................................... 22
7.2 Covenants of Buyer ................................................ 23
7.3 Tax Advice......................................................... 23
7.4 Access and Information ............................................ 23
7.5 Expenses .......................................................... 24
7.6 Certain Notifications.............................................. 24
7.7 Publicity.......................................................... 24
7.8 Further Assurances................................................. 24
7.9 Post-Closing Employment ........................................... 25
7.10 Employee Benefits ................................................. 25
7.11 Post-Closing Underwriting and Other Contractual Obligations ....... 25
7.12 Use of Name........................................................ 26
ARTICLE 8
Termination, Amendment and Waiver.................................. 27
8.1 Termination ....................................................... 27
8.2 Effect of Termination ............................................. 27
8.3 Amendment ......................................................... 27
8.4 Waiver............................................................. 27
ARTICLE 9
Indemnification ................................................... 28
9.1 Survival of Representations and Warranties ........................ 28
9.2 Indemnification by Seller ......................................... 28
9.3 Indemnification by Buyer........................................... 28
9.4 Third-Party Claims................................................. 29
9.5 Additional Indemnification Provisions.............................. 29
9.6 Indemnification Non-Exclusive ..................................... 29
9.7 Access and Information ............................................ 29
9.8 Mitigation......................................................... 30
9.9 Right of Set-Off................................................... 30
ARTICLE 10
General Provisions ................................................ 30
10.1 Governing Law ..................................................... 30
10.2 Successors and Assigns............................................. 30
10.3 Entire Agreement................................................... 30
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10.4 Severability....................................................... 31
10.5 Notice ............................................................ 31
10.6 Construction ...................................................... 31
10.7 Headings .......................................................... 32
10.8 Counterparts ...................................................... 32
10.9 Recitals, Schedules, and Exhibits.................................. 32
INDEX OF EXHIBITS
EXHIBIT "A" - Promissory Note
EXHIBIT "B" - List of Counties
LIST OF SCHEDULES
Disclosure Schedule
iv
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 1998, by and among FIDELITY NATIONAL TITLE INSURANCE
COMPANY OF NEW YORK, a New York corporation ("Seller"); NATIONAL TITLE INSURANCE
COMPANY OF NEW YORK, INC., a New York corporation ("Company"); and AMERICAN
TITLE COMPANY, a California corporation ("Buyer"). Seller, Company, and Buyer
are sometimes referred to collectively herein as the "Parties" or singularly as
a "Party."
RECITALS
A. Seller is the record and beneficial owner of all of the outstanding
capital stock of Company (the "Company Stock").
B. This Agreement contemplates the acquisition by Buyer from Seller of all
of the Company Stock.
C. The respective Boards of Directors of Buyer and Seller believe that this
Agreement and the transactions contemplated herein are advisable and in the best
interests of their respective shareholders.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Article 1
shall have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and the plural forms of such terms. Any
capitalized term used in this Agreement and not ascribed a meaning in this
Article 1 shall have the meaning ascribed to such term elsewhere in this
Agreement.
"AFFILIATE" means, with respect to a Person, any other Person that directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with such Person.
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"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or would reasonably form the basis
for any specified consequence.
"BENEFIT ARRANGEMENT" mean any form of current or deferred compensation,
bonus, stock option, stock appreciation right, severance pay, salary
continuation, pension, profit-sharing, retirement or incentive plan, practice or
arrangement, any group or individual disability, medical, dental, health,
hospitalization, life insurance or other insurance plans or related benefits, or
any other welfare or similar plan or arrangement for the benefit of any
director, officer or employee, whether active or retired, or for any class or
classes of such directors, officers or employees.
"CLAIM" means any actual or threatened claim, action, suit, arbitration,
hearing, inquiry, proceeding (including administrative and informal
proceedings), complaint, charge, investigation or audit by or before any
Governmental Entity or arbitrator and any appeal from any of the foregoing.
"CLOSING" has the meaning set forth in Section 3.1, below.
"CLOSING DATE" has the meaning set forth in Section 3.1, below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY STOCK" has the meaning set forth in Recital A.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of any of the Parties that is not already generally available to the
public.
"DISCLOSURE SCHEDULE" means the Schedules to this Agreement required to be
prepared by Seller and Company and delivered to Buyer.
"EMPLOYEE PLAN" means any "employee benefit plan," as defined in Section
3(3) of ERISA, which is subject to any provisions of ERISA and covers any
employee, whether active or retired.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all Legal Requirements concerning
pollution or protection of the environment, public health and safety, or
employee health and safety, including Legal Requirements relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
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disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, toxic materials or other Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles, as
amended from time to time.
"GOVERNMENTAL ENTITY" means any court, federal, state, local or foreign
government or any administrative agency or commission or any other governmental
authority or instrumentality whatsoever.
"HAZARDOUS SUBSTANCES" means any hazardous, toxic or infectious substance,
material, gas or waste which is regulated by any Governmental Entity.
"INDEBTEDNESS" means, when used with reference to any Person, without
duplication, (i) any Liability of such Person created or assumed by such Person,
or any Subsidiary thereof, (A) for borrowed money, (B) evidenced by a bond,
note, debenture, or similar instrument (including a purchase money obligation,
deed of trust or mortgage) given in connection with the acquisition of, or
exchange for, any property or assets (other than inventory or similar property
acquired and consumed in the Ordinary Course of Business), including securities
and other indebtedness, (C) in respect of letters of credit issued for such
Person's account and "swaps" of interest and currency exchange rates (and other
interest and currency exchange rate hedging agreements) to which such Person is
a party or (D) for the payment of money as lessee under leases that should be,
in accordance with GAAP, recorded as capital leases for financial reporting
purposes; (ii) any Liability of others described in the preceding clause (i)
guaranteed as to payment of principal or interest by such Person or in effect
guaranteed by such Person through an agreement, contingent or otherwise, to
purchase, repurchase, or pay the related Indebtedness or to acquire the security
therefor; (iii) all Liabilities or obligations secured by a Lien upon property
owned by such Person and upon which Liabilities or obligations such Person
customarily pays interest or principal, whether or not such Person has assumed
or become liable for the payment of such liabilities or obligations; and (iv)
any amendment, renewal, extension, revision or refunding of any such Liability
or obligation.
"INTELLECTUAL PROPERTY" means (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissurances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (ii) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (iv) all trade secrets and
confidential business information (including ideas, research and development,
know-how,
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formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals);
(v) all computer software (including data and related documentation); (vi) all
other proprietary rights; and (vii) all copies and tangible embodiments thereof
(in whatever form or medium).
"KNOWLEDGE" means that Seller is actually aware of the fact or matter in
question or reasonably should be aware of the fact or matter in question after a
reasonable investigation concerning such fact or matter.
"LEGAL REQUIREMENT" means any statute, law, ordinance, rule, regulation,
permit, order, writ, judgment, injunction, decree or award issued, enacted or
promulgated by any Governmental Entity or any arbitrator with binding authority
on a Party or Parties, as the case may be.
"LIABILITY" means any liability (whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including, but not limited to,
any liability for Taxes.
"LICENSES" has the meaning set forth in Section 4.14, below.
"LIEN" means all liens (including judgment and mechanics' liens,
regardless of whether liquidated), mortgages, assessments, security interests,
easements, pledges, trusts (constructive or otherwise), deeds of trust, options
or other charges, encumbrances or restrictions.
"LOSSES" means any and all losses, damages, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
interest (including interests from the date of such damages), and costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements of every kind, nature and description).
"MATERIAL ADVERSE EFFECT" means any event, effect, development, occurrence
or circumstance, individually or when taken together with all other such events,
effects, developments, occurrences or circumstances, causing, resulting in or
having a material adverse effect on (i) the business, assets, results of
operations, properties or condition (financial or otherwise) of Buyer, Seller or
Company (as applicable); or (ii) the legal right or authorization of Buyer,
Seller or Company (as applicable) to continue to operate its business as a going
concern.
"MATERIAL CONTRACTS" means (i) any union contract or any employment or
consulting contract or arrangement providing for future compensation, written or
oral, with any officer, director or employee which is not terminable on thirty
(30) days notice or less without penalty or obligation to make payments related
to such termination; (ii) any plan contract or arrangement, whether written or
oral, providing for bonuses, pensions, deferred compensation, severance pay or
benefits, retirement payments, profit sharing or the like; (iii) any existing
distribution agreement, volume purchase agreement, or similar agreement (but
excluding individual customer
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purchase orders) in which the annual amount involved in fiscal 1997 exceeded or
is expected to exceed $25,000 in aggregate amount; (iv) any individual customer
purchase order for the sale of goods or services in excess of $25,000; (v)
except for trade indebtedness incurred in the Ordinary Course of Business, any
Indebtedness incurred in the acquisition of companies or other entities or
Indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, leasehold obligations or
otherwise; (vi) any contract containing covenants purporting to limit in any way
the freedom of Company to compete in any line of business or in any geographic
area; (vii) any agreement of indemnification other than those entered into in
connection with the sale of products or services of Company in the Ordinary
Course of Business; (viii) any agreement, contract or commitment relating to
capital expenditures and which involve future payments in excess of $25,000 in
the aggregate by Company; (ix) any agreements, contracts or commitments relating
to the disposition of assets, including any intangible assets or intellectual
property rights (other than inventory), which involve payments in excess of
$25,000 in the aggregate by Company; (x) any contracts with a Governmental
Entity subject to price redetermination or renegotiation; or (xi) all insurance
policies of Company; (xii) all equipment leases of Company which involve
payments in excess of $10,000 in the aggregate; or (xiii) any other agreement,
contract or commitment which is material to Company.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency and, where appropriate, in accordance with formula).
"PARTY" has the meaning set forth in the preamble to this Agreement.
"PERMITTED LIENS" means (i) mechanic's, materialmen's, and similar liens;
(ii) liens for Taxes not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings; and (iii) purchase
money liens and liens securing rental payments under capital lease arrangements.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof), or any other legal
entity.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs, duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
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added, alternative or add-on minimum, estimated, or other tax or contribution of
any kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2
THE BASIC TRANSACTION
2.1 PURCHASE AND SALE OF COMPANY STOCK. On the Closing Date, subject to the
terms and conditions of this Agreement, Buyer shall acquire from Seller, and
Seller shall sell to Buyer, the Company Stock, free and clear of all Liens,
Claims, Indebtedness and Security Interests.
2.2 CONSIDERATION AT CLOSING. In consideration for the acquisition of the
Company Stock in accordance with Section 2.1, above, Buyer shall, on the Closing
Date, (i) pay to Seller the cash sum of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) by delivery, at Buyer's option, of a cashier's or certified
bank check, or by wire transfer to an account or accounts designated by Seller;
and (ii) deliver to Seller that certain Promissory Note in the principal amount
of Two Million Dollars ($2,000,000), a copy of which is attached hereto as
Exhibit "A."
2.3 CERTIFICATE DELIVERY REQUIREMENT. On the Closing Date, Seller shall
deliver to Buyer the certificate(s) (the "Certificates") representing the
Company Stock, duly endorsed in blank by Seller, or accompanied by blank stock
powers, and with all necessary transfer tax and other revenue stamps affixed and
canceled.
ARTICLE 3
CLOSING
3.1. CLOSING. The consummation of the purchase and sale of the Company
Stock and the other transactions contemplated by this Agreement (the "Closing"),
shall take place at the offices of Buyer, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on such date (the "Closing Date") and at such time
as may be mutually designated by the Parties within five (5) business days
following the satisfaction or waiver of the conditions set forth in Sections 3.4
and 3.5, below (including, without limitation, the "Requisite Regulatory
Approvals," as defined below), or such other date, time, place and manner as the
Parties may mutually agree.
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3.2 SELLER'S DELIVERIES AT CLOSING. Provided that all of the conditions to
the Closing set forth in Sections 3.4 and 3.5, below, have been satisfied or
waived by the Party benefiting therefrom, Seller shall execute and deliver or
cause to be delivered to Buyer at or prior to the Closing the following
documents:
(a) The Certificates, in accordance with Section 2.3 above;
(b) Company's original minute book, such minute book to contain (i)
original Articles of Incorporation and all amendments thereto, or copies
thereof if the originals are unavailable; (ii) Company's Bylaws presently in
effect; (iii) Company's stock transfer records together with all available
canceled stock certificates; and (iv) all minutes of meetings or consents
in lieu of such meetings of Company's Board of Directors and shareholders.
Each of the above items shall be certified by the Secretary of Seller; and
(c) Minutes of the Board of Directors of Seller, certified by the
Secretary of Seller, authorizing and approving this agreement and the
transactions contemplated herein;
(d) Resignations of all of the officers and directors of Company
effective as of the Closing Date;
(e) Within thirty (30) days after the execution of this Agreement, the
Disclosure Schedule required under Article 4, below; and
(f) Such other documents and instruments as may be specified in this
Agreement or otherwise reasonably requested by Buyer in order to consummate the
transactions contemplated hereby.
3.3 BUYER'S DELIVERIES AT CLOSING. Provided that all of the conditions to
the Closing set forth in Sections 3.4 and 3.5, below, have been satisfied or
waived by the Party benefiting therefrom, Buyer shall execute and deliver or
cause to be delivered to Seller at the Closing:
(a) The cash and the Promissory Note in accordance with Section 2.2,
above; and
(b) Such other documents and instruments as may be specified in this
Agreement or otherwise reasonably requested by Seller in order to consummate the
transactions contemplated hereby.
3.4 CONDITIONS OF BUYER. Buyer's obligations hereunder to consummate the
transactions contemplated hereby are subject to the satisfaction, at or prior to
the Closing, of all of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES TRUE: PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by Seller in this Agreement shall be
true, correct and complete in all material respects on and as of the Closing
Date with the same force and effect as if they had been made on and as of said
date; and Seller and Company shall have in all material respects performed all
of the obligations and complied with each and all of the covenants required to
be performed or complied with by them on or prior to the Closing Date.
(b) MATERIAL ADVERSE EFFECT. No act, event or condition shall have
occurred after the date hereof which Buyer determines in its reasonable
discretion has had or could have a Material Adverse Effect on Company.
(c) AUTHORIZATIONS. APPROVALS AND CONSENTS. All authorizations,
approvals or consents from third parties, including from any Governmental
Entity, landlord or other Person, necessary for the consummation of the
transactions contemplated hereby shall have been obtained.
(d) DELIVERIES. Buyer shall have received from Seller the delivery
obligations set forth in Sections 3.2, above.
(e) DISCLOSURE SCHEDULE. Buyer shall be satisfied in its reasonable
discretion with the Disclosure Schedule to be delivered by Seller in accordance
with Section 3.2(e), above, and shall notify Seller of such approval or
disapproval within ten (10) business days of receipt of the Disclosure Schedule.
(f) NO CLAIMS. There shall not be instituted and pending or
threatened any Claims before any Governmental Entity (i) challenging or
otherwise seeking to restrain or prohibit the consummation of the transactions
contemplated hereby, or (ii) seeking to prohibit the direct or indirect
ownership or operation by Buyer of all or a material portion of the capital
stock, business or assets of Company, or to compel Buyer or Company to dispose
of or hold separate all or a material portion of the capital stock, business or
assets of Company or Buyer.
(g) CORPORATE ACTION. All corporate and other proceedings and actions
taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments, releases and documents
referenced herein or incident to the transactions contemplated hereby shall be
in form and substance satisfactory to Buyer in its reasonable discretion.
(h) REQUISITE REGULATORY APPROVALS. All notices or filings required
to be made, all authorizations, permits, certificates, registrations, consents,
approvals or orders required to be obtained, and all waiting periods required to
expire, prior to the consummation of the transactions contemplated by this
Agreement under applicable federal law of the United States or applicable laws
of any state having jurisdiction over the transactions contemplated by this
Agreement or the businesses conducted by the Parties or any Affiliate or
Subsidiary of any
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Party, including those described in Section 7.1(g), below, (collectively, the
"Requisite Regulatory Approvals") shall have been obtained or expired, as the
case may be, without the imposition of any condition which is materially
burdensome upon Buyer or any Party or Person to be affected by such condition.
(i) DUE DILIGENCE INVESTIGATION. Within forty (40) days after the
date of this Agreement, Buyer shall have concluded (through its
representatives, accountants, counsel and other experts) its due diligence
investigation of the business, condition (financial, legal and other),
properties, assets, prospects, operations and affairs of Company (as
contemplated by Section 7.4, below) and shall, in its reasonable discretion,
be satisfied with the results thereof, which results shall promptly be
communicated to Seller at the end of such forty (40) day period.
3.5 CONDITIONS OF SELLER AND COMPANY. Seller's and Company's obligations
hereunder to consummate the transactions contemplated hereby are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE: PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by Buyer in this
Agreement shall be true, correct and complete in all material respects on and
as of the Closing Date with the same force and effect as if they had been
made on and as of said date; and Buyer shall have in all material respects
performed all of the obligations and complied with each and all of the
covenants required to be performed or complied with by it on or prior to the
Closing Date.
(b) MATERIAL ADVERSE EFFECT. No act, event or condition shall have
occurred after the date hereof which Seller determines in its reasonable
discretion has had or could have a Material Adverse Effect on Buyer.
(c) AUTHORIZATIONS, APPROVALS AND CONSENTS. All authorizations,
approvals or consents, if any, from third parties, including from any
Governmental Entity or other Person, required to be obtained by Buyer shall
have been obtained.
(d) DELIVERIES. Seller shall have received from Buyer the delivery
obligations set forth in Section 3.3, above.
(e) NO CLAIMS. There shall not be instituted and pending or
threatened any Claims before any Governmental Entity (i) challenging or
otherwise seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, or (ii) seeking to prohibit the direct or
indirect ownership or operation by Buyer of all or a material portion of the
business or assets of Company, or to compel Buyer or Company to dispose of or
hold separate all or a material portion of the business or assets of Company
or Buyer.
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(f) REQUISITE REGULATORY APPROVALS. The Requisite Regulatory
Approvals, including those described in Section 7.1(g), below, shall have
been obtained or expired, as the case may be, without the imposition of any
condition which is materially burdensome upon Seller, Company or any Party or
Person to be affected by such condition.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that (except for changes
contemplated by this Agreement and except as set forth in the Disclosure
Schedule attached hereto), each of the following statements is true, correct
and complete as of the date of this Agreement and will be true, correct and
complete as of the Closing Date (each such statement to be made again by
Seller on that date with the Closing Date being substituted for the date of
this Agreement throughout this Article 4):
4.1 ORGANIZATION AND STANDING: ARTICLES AND BYLAWS. Seller and Company
are corporations duly organized, validly existing and in good standing under
the laws of the State of New York, have full power and authority to own their
respective assets and properties and to carry on their respective business as
presently conducted. Company is duly qualified and authorized to do business,
and is in good standing as a foreign corporation, in each jurisdiction where
the nature of its activities and of its properties (both owned and leased)
make such qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
4.2 AUTHORIZATION. All corporate action on the part of Seller and
Company, and their respective officers, directors and shareholders necessary
for the authorization, execution and delivery of this Agreement and the
documents contemplated hereby, the performance of all of Seller's and
Company's obligations hereunder and thereunder, and for the transfer of the
Company Stock have been taken or will be taken prior to the Closing. This
Agreement and the documents contemplated hereby, when executed and delivered,
shall constitute valid and legally binding obligations of Seller and Company
enforceable in accordance with their respective terms.
4.3 SUBSIDIARIES. Company has no Subsidiaries and does not presently
own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, nor is the
Company, directly or indirectly, a participant in any joint venture,
partnership or other entity.
4.4 CAPITALIZATION. The authorized capital stock of Company consists of
200,000 shares of Common Stock, par value $7,500 per share, of which 123,949
shares are issued and outstanding as of the date of this Agreement. All of
the shares of Company Stock have been
10
duly authorized and validly issued and are fully paid and non-assessable. All
of the shares of Company Stock were offered, issued, sold and delivered by
Company in compliance with all applicable state and federal laws concerning
the issuance of securities. None of the shares of Company Stock were issued
in violation of any preemptive rights created by statute, or by Company's
charter documents, or by any agreement to which Company may be bound.
There are no outstanding shares of common stock, preferred stock or any
other equity securities of Company, and there are no options, warrants,
calls, conversion rights, commitments or agreements of any character to which
Seller or Company may be bound, that do or may obligate Seller or Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of common stock, preferred stock or other equity securities or that do
or may obligate Seller or Company to grant, extend or enter into any such
option, warrant, call, conversion right, commitment or agreement. There are
no outstanding arrangements, agreements, commitments or understandings of any
kind affecting or relating to the voting, issuance, purchase, redemption,
repurchase or transfer of any capital stock of Company or any other
securities of Company. Seller and Company have not, or prior to the Closing
will have not, become a party to or subject to any contract or obligation
wherein any Person has a right or option to purchase or acquire any rights in
any additional capital stock or securities of Company. Seller owns of record
and beneficially, and has good and marketable title to all of the shares of
Company Stock, free and clear of all Claims, Liens and Encumbrances. As a
result of the transactions contemplated hereby, Buyer will be the record and
beneficial owner of all outstanding capital stock of Company and rights to
acquire capital stock of Company.
4.5 FINANCIAL STATEMENTS. Schedule 4.5 to the Disclosure Schedule hereto
includes true, complete and correct copies of (i) Company's most recent Form
9; and (ii) Company's balance sheet as of December 31, 1997 (the end of its
most recently completed fiscal year) and statements of income, cash flows and
retained earnings for the year then ended (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
GAAP consistently applied and fairly present the financial position of
Company as of the date thereof and the results of its operations and cash
flows for the period then ended. There are no Company Liabilities, direct or
indirect, fixed or contingent, which are not reflected or reserved in the
balance sheet as of December 31, 1997, except for Liabilities incurred in the
Ordinary Course of Business subsequent to December 31, 1997, which, either
individually or in the aggregate, would not be material. To the Knowledge of
Seller, there is no Basis for any assertion against Company of any Liability
or obligation of any nature whatsoever that is not fully reflected or
reserved in the Financial Statements which, either individually or in the
aggregate, would be material.
4.6 MATERIAL CONTRACTS. True, correct and complete copies of all
Material Contracts shall, at the request of Buyer, be furnished by Company to
Buyer in connection with Buyer's due diligence investigation of Company. Each
Material Contract so delivered is a valid and binding obligation of Company
and is enforceable against Company and the other Person or Persons thereto,
in accordance with its terms, subject to laws of general application relating
to
11
bankruptcy, insolvency and the relief of debtors and subject to the
availability of equitable remedies. Company has performed all obligations
required to be performed by it to date and is not in default under or in
breach of any term or provision of any Material Contract to which Company is
a party, is subject or is otherwise bound, and no event has occurred that,
with the giving of notice or the passage of time or both, would constitute
such a default or breach under any Material Contract. To the Knowledge of
Seller, no party with whom Company has a Material Contract is in default of
its obligations thereunder. Except as set forth on Schedule 4.6 of the
Disclosure Schedule, no consent or approval of any Person to any of the
Material Contracts is necessary in order to permit Company to consummate the
transactions contemplated hereby.
4.7 ASSETS OTHER THAN REAL PROPERTY. Company has good and marketable
title to all properties and assets (other than real property which is subject
to Section 4.8, below) owned or leased by Company, free and clear of all
Liens except for: (i) Permitted Liens; and (ii) Liens, if any, that are not
substantial in character, amount or extent and do not detract materially from
the value, or interfere with present use or the sale or other disposition, of
the property subject thereto or affected thereby. The assets and properties
of Company constitute all the assets, properties, rights, privileges and
interests necessary for the operation of Company's business. All of the
vehicles, machinery and equipment of Company are in good working order and
condition, ordinary wear and tear excepted.
4.8 REAL PROPERTY. Schedule 4.8 to the Disclosure Schedule sets forth a
true, correct and complete list of all real property (the "Real Property")
owned by Company and all Liens, Claims and Indebtedness encumbering such
Property. Subject to the Liens, Claims and Indebtedness encumbering the Real
Property, Company has good, marketable and insurable title to the Real
Property. The improvements on the Real Property have been maintained in the
Ordinary Course of Business. There are no condemnation or appropriation
proceedings pending or threatened, or to the Knowledge of Seller any Basis
therefore, against any of the Real Property or the improvements thereon. The
use of the Real Property and the improvements thereon is in compliance with
all Legal Requirements in all material respects. Schedule 4.8 to the
Disclosure Schedule hereto also contains an accurate list and general
description of all real property leases, subleases, licenses or similar
agreements (the "Leases") to which Company is a party (copies of which have
been previously furnished to Buyer), in each case setting forth (i) the
landlord and tenant or sublessor and sublessee, as applicable, thereof and
the date and term of each of the Leases; (ii) the legal description or street
address of each property covered thereby; and (iii) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"). Company has valid leasehold interests in the
Leased Premises, free and clear of all Liens and Claims, except for (i)
Claims of lessors, co-lessees or sublessees in such matters as are reflected
in the Leases; (ii) title exceptions affecting the fee estate of the lessor
under such Leases; and (iii) other matters as described in the Disclosure
Schedule. Company is not in default, and no facts or circumstances have
occurred which, through the passage of time or both, or the giving of notice
would constitute a default, under any Lease. The activities of Company, with
respect to
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the Leased Premises, are in all material respects permitted and authorized by
applicable zoning laws, ordinances and regulations and all laws and
regulations of any Governmental Entity. To the Knowledge of Company, the
portions of the buildings on the Leased Premises that are used in the
business of Company are each in good repair and condition (including without
limitation, the electrical, mechanical, HVAC, plumbing, elevator, other
building systems and structural components serving such premises, and the
roofs are water-tight), and are in the aggregate sufficient to satisfy
Company's current business activities as conducted thereat.
4.9 NO CONFLICTS. Neither the execution and delivery nor the performance
of this Agreement by Seller and Company will result in any of the following:
(i) a default or an event that, with notice or lapse of time or both, could
be a default, breach or violation of (A) the Articles of Incorporation or
Bylaws of Seller or Company, (B) any Material Contract; (ii) the termination
of any Material Contract or the acceleration of the maturity of any
Indebtedness or other material obligation of Company; (iii) the creation or
imposition of any Lien (except for Permitted Liens) on any of the assets or
properties of Company; (iv) the creation or imposition of any Lien on any
shares of the Company Stock; or (v) a violation or breach of any writ,
injunction or decree of any Governmental Entity or arbitrator to which
Company is a party or by which any of its properties are bound.
4.10 LITIGATION. There are no Claims before any court or administrative
agency pending or currently threatened against or with respect to Seller or
Company (or to the Knowledge of Seller any Basis therefor), which question
the validity of this Agreement or any action taken or to be taken in
connection herewith, or which, individually or in the aggregate, might result
in a Company Material Adverse Effect, or in any material impairment of the
right or ability of Company to carry on its business as now conducted, or in
any Liability or Loss on the part of Company in excess of reserves. Company
is not a party or subject to, and none of its assets are bound by, the
provisions of any order, writ, injunction, judgment, or decree of any
Governmental Entity or arbitrator.
4.11 TAXES. Company has no Liability for any federal, state or local
Taxes, except for Taxes which have accrued and are not yet payable. Company
has filed or caused to be filed all Tax Returns required under applicable law
to be filed on or before the Closing Date, Company has paid or made provision
for all Taxes and other charges which have or may become due for the periods
covered by such Tax Returns, and all such Tax Returns are true, correct and
complete in all respects. None of the Tax Returns of Company are currently
under investigation or audit, nor is an investigation or audit pending, and
there has not been an investigation or audit of the Tax Returns of Company in
the past seven (7) years. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any Tax Return
for any period. The accounting treatment of all items of income, gain, loss,
deduction and credit as reported on all Tax Returns and estimates filed by or
on behalf of Company are true, correct and complete, and all deferred Taxes
and all Taxes due for the period ending on the Closing Date have been accrued
on the Balance Sheet of the December 31, 1997 Financial Statements. No Claim
has ever been made by any Governmental Entity in
13
a jurisdiction where Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. All Taxes owed by Company or which
Company is obligated to withhold from amounts owed or owing to any employee,
independent contractor, stockholder, creditor or third party have been paid.
There are no unresolved Claims concerning Company's Tax Liability, and to the
Knowledge of Seller no Basis for any such Claims exist.
4.12 EMPLOYEES. Schedule 4.12 to the Disclosure Schedule hereto sets
forth a complete list of all current employees of Company, title or job
classification, and the current annual rate of compensation payable to each
such employee. There are no unfair labor practice complaints, strikes,
slowdowns, stoppages or other controversies pending or threatened, attempts
to unionize or controversies threatened between Company and, or relating to,
any of its employees, nor to the Knowledge of Seller any Basis therefore.
Company is not a party to any collective bargaining agreement with respect to
any of its employees or to a written employment contract with any of its
employees, and there are no understandings with respect to the employment of
any officer or employee of Company which are not terminable by Company
without Liability on not more than thirty (30) days' notice. No officer,
director, or employee is entitled to receive any payment of any amount under
any existing agreement, Benefit Arrangement, Employment Plan or other
benefit, or to the accrual or vesting of any other benefit or payment as a
result of the consummation of any transactions contemplated by this
Agreement. Company has complied with all applicable Legal Requirements which
govern workers' compensation, equal employment opportunity and equal pay.
Company's employment of each of its employees is in compliance with all
immigration and naturalization laws of the United States.
4.13 CONSENTS. All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations or filings with,
any Governmental Entity or under any Material Contract or Company's most
recent Form 9, required on the part of Company in connection with the valid
execution and delivery of this Agreement and the exchange and cancellation of
the Company Stock, or the consummation of any other transaction contemplated
hereby have been obtained, or will be obtained and effective at or prior to
the Closing.
4.14 OPERATING RIGHTS. Company has all operating authority, licenses,
franchises, permits, certificates, consents, rights and privileges
(collectively, "Licenses") as are necessary or appropriate to the operation
of its business as now conducted. Such Licenses are in full force and effect,
no violations have been or are expected to have been recorded in respect of
any such Licenses, and no proceeding is pending or threatened, or to the
Knowledge of Seller any Basis therefore, that could result in the revocation
or limitation of any such Licenses. Company has conducted its business so as
to comply in all material respects with all such Licenses.
14
4.15 COMPLIANCE WITH APPLICABLE LAWS. The properties, assets, business
and operations of Company have been and are being maintained and conducted in
compliance with all Legal Requirements to which Company is subject. No
investigation or review by any Governmental Entity with respect to Company is
pending or threatened, or to the Knowledge of Seller is there any Basis
therefore, nor has any Governmental Entity indicated to Company an intention
to conduct the same.
4.16 INSURANCE. Schedule 4.16 to the Disclosure Schedule hereto sets
forth an accurate list, as of the date of the delivery to Buyer of the
Disclosure Schedule, of all insurance policies carried by Company and all
insurance loss runs or workmen's compensation claims received for the past
two (2) policy years. Attached to Schedule 4.16 to the Disclosure Schedule
are true, complete and correct copies of the summaries from the insurance
company of all current insurance policies, all of which are in full force and
effect, and a list of all pending insurance claims. All premiums payable
under all such policies have been paid and Company is otherwise in full
compliance with the terms of such policies (or other policies providing
substantially similar insurance coverage). To the Knowledge of Seller, such
policies of insurance are of the type and in amounts carried by Persons
conducting businesses similar to that of Company. There is no threatened
termination of or material premium increase with respect to, any of such
policies. All claims previously made under such policies have been timely
filed.
4.17 ABSENCE OF CHANGES. Except as set forth on Schedule 4.17 to the
Disclosure Schedule, since January 1, 1998, there has not been (i) any change
or amendment in the Articles of Incorporation, Bylaws or other governing
instruments of Company; (ii) any sale or issuance of, or grant of options or
rights to acquire, any shares of the Company Stock or other securities of
Company or any declaration, setting aside, or payment of dividends or
redemptions in respect of any shares of capital stock of Company, or any
direct or indirect redemption, purchase, or other acquisition of such stock,
or any agreement, understandings or commitments to do the same; (iii) any
transfer or other disposition or pledge of, or the grant of options or rights
to acquire, any of the outstanding shares of the Company Stock; (iv) any
amendment, termination or revocation, or any threat of any amendment,
termination, or revocation of any Material Contract; (v) any sale, transfer,
mortgage, pledge, or subjection to Lien (other than Permitted Liens) of, on
or affecting any of the assets of Company valued at or above $10,000
individually or in the aggregate; (vi) any increase in the compensation paid
or payable or in the fringe benefits provided to any employee of Company, or
the adoption of any Benefit Arrangements or Employee Plans not in existence
in the fiscal year ended December 31, 1997; (vii) any damage, destruction or
loss, whether or not covered by insurance, of any of the assets of Company;
(viii) any purchase or lease, or commitment for the purchase or lease, of
equipment or other capital items not disclosed in Company's Financial
Statements which is in excess of the normal, ordinary and usual requirements
of the business of Company; (ix) any change that by itself or together with
other changes, has had a Material Adverse Effect; (x) any agreement or
arrangement made by Seller to take any action which, if taken prior to the
date hereof, would have made any representation or warranty set forth in
15
this Agreement untrue or incorrect as of the date when made; or (xi) the
commencement or notice or threat of commencement of any Claim against Company
or any of its affairs other than title insurance Claims in the Ordinary
Course of Business, notice of which has or will be provided to Buyer.
4.18 EMPLOYEE PLANS. Schedule 4.18 to the Disclosure Schedule hereto
sets forth a complete list of all Employee Plans and Benefit Arrangements
maintained, administered or contributed to, or otherwise participated in, by
Company. True and complete copies of each such Employee Plan or Benefit
Arrangement, including amendments thereto, have been provided to Buyer,
together with true and complete copies of (i) annual reports for the most
recent three (3) years (Form 5500 Series including, if applicable, Schedules
A and B thereto); (ii) all plan documents and the most recent summary plan
description of each such Employee Plan, together with any modifications
thereto; and (iii) the most recent favorable determination letter (if
applicable) from the Internal Revenue Service for each such Employee Plan.
None of the Employee Plans is a "multiemployer plan" as defined in Section
3(37) of ERISA or a "multiple employer plan" as covered in Section 412(c) of
the Code, and the Company has not been obligated to make a contribution to
any such multiemployer or multiple employer plan. All contributions
(including all employer contributions and employee salary reduction
contributions) which are due have been paid to each such Employee Plan or
Benefit Arrangement and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee
Plan or Benefit Arrangement or accrued in accordance with past custom and
practice of Company. Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and each trust maintained
pursuant thereto is exempt from income tax under Section 501(a) of the Code.
Neither Company nor any Employee Plan, nor any trusts created thereunder, nor
any trustee, administrator nor any other fiduciary thereof, has engaged in a
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975
of the Code, or any breach of fiduciary duty as defined in Part 4 of Subtitle
B of Title I of ERISA.
4.19 INTELLECTUAL PROPERTY RIGHTS.
(a) Company owns, or has the right to use, sell or license all
Intellectual Property necessary or required for the conduct of its business
as presently conducted and such rights to use, sell or license are reasonably
sufficient for such conduct of Company's business. Company has taken all
reasonable and practicable action designed to safeguard and maintain the
secrecy and confidentiality of, and its proprietary right in, all of its
Intellectual Property.
(b) Neither the manufacture, marketing, license, sale or intended
use of any Intellectual Property licensed or sold by Company or currently
under development by Company violates any license or agreement between
Company and any third party or infringes any Intellectual Property of any
other party; and there is not pending or threatened, nor to the Knowledge of
Seller any Basis therefor, any Claim contesting the validity, ownership or
right to use, sell, license or dispose of any Intellectual Property or that
the proposed use, sale,
16
license or disposition thereof conflicts or will conflict with the rights of any
other party, nor to the Knowledge of Seller, is there any Basis for any such
assertion.
4.20 ENVIRONMENT, HEALTH AND SAFETY.
(a) Company has complied with all Environmental, Health and Safety
Laws, except where failure to comply would not have a Material Adverse
Effect, and no Claim or notice has been filed or commenced against it
alleging any failure to so comply. Without limiting the generality of the
preceding sentence, Company has obtained and been in compliance with all of
the terms and conditions of all Licenses and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables which are contained in, all Environmental, Health, and Safety
Laws, except where failure to comply would not have a Material Adverse Effect.
(b) Company has not handled or disposed of any substance, arranged
for the disposal of any substance, exposed any employee or other individual
to any substance or condition, or owned or operated any property or facility
in any manner that could form a Basis for any present or future Claim against
Company giving rise to any Liability, except where having done so would not
have a Material Adverse Effect. Company has no Liability for damage to any
site, location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any reason
under any Environmental, Health, and Safety Law which could have a Material
Adverse Effect.
(c) All properties used in the Company's business are free of
Hazardous Substances, except where the existence thereof would not have a
Material Adverse Effect.
4.21 CERTAIN TRANSACTIONS. Except as set forth on Schedule 4.21 of the
Disclosure Schedule, there are no existing or pending transactions, nor are
there any agreements or understandings, between Company, on the one hand, and
any officer or director of Company, or any person or entity affiliated with
any of them, on the other hand, including, without limitation, any
transactions, arrangements or understandings relating to the purchase or sale
of goods or services or the sale, lease or use of any of the assets of or by
Company, with or without adequate compensation, or to any indebtedness owed
to or by Company, in any amount whatsoever.
4.22 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 4.22 of the Disclosure
Schedule sets forth any and all updates or revisions as of the date of this
Agreement to Company's most recent Form 9, with respect to Company's bank
accounts and/or investments. Schedule 4.22 of the Disclosure Schedule hereto
also sets forth the name of each Person holding a general or special power of
attorney from Company and a description of the terms of such power.
17
4.23 BROKERS' FEES. Seller and Company have no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement.
4.24 FULL DISCLOSURE. Neither this Agreement, the representations and
warranties by Seller contained herein, the Exhibits or Schedules hereto, nor
any other written statement or certificate delivered or to be furnished to
Buyer in connection herewith, when read together, contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. To
the Knowledge of Seller, there is no fact which has not been disclosed to
Buyer that would have a Material Adverse Effect or would affect the ability
of Seller and Company to perform their obligations under this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that (except for changes
contemplated by this Agreement) each of the following statements is true,
correct and complete in all material respects as of the date of this
Agreement and will be true, correct and complete in all material respects as
of the Closing Date (each such statement to be made again by Buyer on that
date with the Closing Date being substituted for the date of this Agreement
throughout this Article 5):
5.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California, has full power and authority to own its
assets and properties and to carry on its business as presently conducted.
Buyer is duly qualified and authorized to do business, and is in good
standing as a foreign corporation, in each jurisdiction where the nature of
its activities and properties (both owned and leased) make such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect.
5.2 AUTHORIZATION. All corporate action on the part of Buyer and its
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement and the documents contemplated
hereby, the performance of all of Buyer's obligations hereunder and
thereunder, and for the purchase of the Company Stock have been taken or will
be taken prior to the Closing. This Agreement and the documents contemplated
hereby, when executed and delivered by Buyer, shall constitute valid and
legally binding obligations of Buyer enforceable in accordance with their
respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and subject to the
availability of equitable remedies.
18
5.3 NO CONFLICTS. Neither the execution and delivery nor the performance
of this Agreement by Buyer will result in any of the following: (i) a default
or an event that, with notice or lapse of time or both, could be a default,
breach or violation of (A) the Articles of Incorporation or Bylaws of Buyer,
(B) any Material Contract of Buyer; (ii) the termination of any Material
Contract of Buyer or the acceleration of the maturity of any Indebtedness or
other material obligation of Buyer; (iii) the creation or imposition of any
Lien (except for Permitted Liens) on any of the assets or properties of
Buyer; (iv) the creation or imposition of any Lien on any shares of Buyer's
Common Stock; or (v) a violation or breach of any writ, injunction or decree
of any Governmental Entity to which Buyer is a party or by which any of its
properties are bound.
5.4 GOVERNMENTAL CONSENTS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations,
declarations or filings with, any Governmental Entity, required on the part
of Buyer in connection with the valid execution and delivery of this
Agreement and the purchase of the Common Stock, or the consummation of any
other transaction contemplated hereby have been obtained, or will be
effective at the Closing.
5.5 BROKERS' FEES. Buyer is not a party to or obligated under any
agreement with any broker, agent, or finder relating to the transactions
contemplated hereby, and neither the execution of this Agreement nor the
consummation of the transactions provided for herein will result in any
liability to any broker, agent, or finder.
5.6 FULL DISCLOSURE. Neither this Agreement, the representations and
warranties by Buyer contained herein, the Exhibits or Schedules hereto, nor
any other written statement or certificate delivered or to be furnished to
Seller in connection herewith, when read together, contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CLOSING
During the period commencing on the date hereof and continuing through
the Closing Date, Seller and Company, jointly and severally, covenant and
agree that, unless consented to in writing by Buyer, which consent shall not
be unreasonably withheld:
6.1 QUALIFICATION. Company shall maintain all qualifications to transact
business and remain in good standing in its jurisdiction of incorporation and
in the foreign jurisdictions in which Company owns or leases any property or
conducts any business.
6.2 ORDINARY COURSE. Company shall conduct its business in, and only in,
the Ordinary Course of Business and, to the extent consistent with such
business, shall not make or institute any unusual or novel methods of
management, accounting, or operation that vary
19
materially from those methods used by the Company as of December 31, 1997.
Company will use its best efforts to preserve its business organization
intact, to keep available to Company its present officers and employees, and
to preserve its present relationships with suppliers, customers, and others
having business relationships with the Company. Company shall maintain its
properties and assets in good condition and repair.
6.3 CORPORATE CHANGES. Company shall not (i) amend its Articles of
Incorporation or Bylaws (or equivalent documents); (ii) acquire by merging or
consolidating with, or agreeing to merge or consolidate with, or purchase any
of the stock or assets of, or otherwise acquire, any business or any
corporation, partnership, association or other business organization or
division thereof; (iii) enter into any partnership or joint venture; (iv)
declare, set aside, make or pay any dividend or other distribution in respect
of its capital stock or purchase or redeem, directly or indirectly, any
shares of its capital stock; (v) issue or sell any shares of its capital
stock of any class or any options, warrants, conversion or other rights to
purchase any such shares or any securities convertible into or exchangeable
for such shares; or (vi) liquidate or dissolve or obligate itself to do so.
6.4 INDEBTEDNESS. Company shall not incur any Indebtedness, sell any
debt securities or lend money to or guarantee the Indebtedness of any Person.
Company shall not restructure or refinance its existing Indebtedness.
6.5 ACCOUNTING. Company shall not make any change in the accounting
principles, methods or practices followed by it or depreciation or
amortization policies or rates heretofore adopted by it. Company shall
maintain its books, records, and accounts in accordance with GAAP applied on
a basis consistent with that of prior periods.
6.6 COMPLIANCE WITH LEGAL REQUIREMENTS. Company shall comply promptly
and in all material respects with all Legal Requirements imposed upon it, its
operations and with respect to the transactions contemplated by this
Agreement, and shall cooperate promptly with, and furnish information to,
Buyer in connection with any such requirements imposed upon Buyer, or upon
any of its Affiliates, in connection therewith or herewith.
6.7 DISPOSITION OF ASSETS. Except in the Ordinary Course of Business,
Company shall not sell, transfer, license, lease or otherwise dispose of, or
suffer or cause the encumbrance by any Lien other than Permitted Liens upon
any of its properties or assets, tangible or intangible, or upon any interest
therein.
6.8 COMPENSATION. Except in the Ordinary Course of Business, Company
shall not (i) adopt or amend in any material respect any collective
bargaining, bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation, Employee Plan, Benefit Arrangement, or any
other agreement, trust, fund or arrangement for the benefit of employees
other than to comply with any Legal Requirement; or (ii) pay, or make any
accrual or arrangement for payment of, any increase in compensation, bonuses
or special
20
compensation of any kind, or any severance or termination pay to, or enter
into any employment or loan or loan guarantee agreement with, Seller or any
current or former officer, director, employee or consultant of Company.
6.9 MODIFICATION OR BREACH OF AGREEMENTS; NEW AGREEMENTS. Except in the
Ordinary Course of Business, Company shall not terminate or modify, or commit
or cause or suffer to be committed any act that will result in breach or
violation of any term of or (with or without notice or passage of time, or
both) constitute a default under or otherwise give any Person a basis for
nonperformance under, any Material Contract, written or oral. Company shall
refrain from becoming a party to any contract or commitment other than in the
Ordinary Course of Business. Company shall meet all of its contractual
obligations in accordance with their respective terms.
6.10 CAPITAL EXPENDITURES. Except in the Ordinary Course of Business,
except for capital expenditures or commitments necessary to maintain its
properties and assets in good condition and repair (the amount of which shall
not exceed $15,000 individually or in the aggregate), Company shall not
purchase or enter into any contract to purchase any capital assets.
6.11 CONSENTS. Company shall use its best efforts to obtain any consent,
authorization or approval of, or exemption by, any Governmental Entity or
Person required to be obtained or made by Company hereto in connection with
the transactions contemplated hereby or the taking of any action in
connection with the consummation thereof.
6.12 MAINTENANCE OF INSURANCE. Company shall maintain its policies of
insurance in full force and effect on substantially the same terms and
conditions as in effect on the date of this Agreement, and shall not do,
permit or willingly allow to be done any act by which any of said policies of
insurance may be suspended, materially impaired or canceled.
6.13 DISCHARGE. Company shall not cancel, compromise, release or
discharge any Claim of Company upon or against any Person or waive any right
of Company, and not discharge any Lien upon any asset of Company or
compromise any debt or other obligation of Company to any Person other than
Liens, debts or obligations with respect to current Liabilities of Company.
6.14 CLAIMS. Company shall not institute, settle or agree to settle any
Claim before any Governmental Entity, except for title insurance Claims in
the Ordinary Course of Business.
6.15 TAXES AND TAX ASSESSMENTS. Company shall pay, when due, and prior
to the imposition or assessment of any interest, penalties or Liens by reason
of the nonpayment of, all Taxes assessed against Company, its assets,
properties or operations. Company shall furnish promptly to Buyer a copy of
all notices of proposed assessment or similar notices or
21
reports that are received from any taxing authority and which relate to
Company's operations for periods ending on or prior to the Closing Date.
ARTICLE 7
ADDITIONAL COVENANTS
7.1 COVENANTS OF SELLER AND COMPANY. During the period from the date
hereof through the Closing Date, Seller and Company agree to:
(a) Comply promptly with all applicable Legal Requirements imposed
upon them with respect to the transactions contemplated by this Agreement,
and shall cooperate promptly with, and furnish information to, Buyer in
connection with any such requirements imposed upon Buyer or upon any of its
Affiliates in connection therewith or herewith;
(b) Use their best efforts to obtain (and to cooperate with Buyer
in obtaining) any consent, authorization or approval of, or exemption by, any
Person required to be obtained or made by Seller and/or Company in connection
with the transactions contemplated by this Agreement;
(c) Use their best efforts to bring about the satisfaction of the
conditions precedent to Closing set forth in Section 3.4, above;
(d) Promptly advise Buyer orally and, within three (3) business
days thereafter, in writing of any change in Company's business or condition
that has had or would reasonably be expected to have a Material Adverse
Effect on Company;
(e) Deliver to Buyer prior to the Closing a written statement
disclosing any untrue statement in this Agreement or any Exhibit or Schedule
hereto (or supplement thereto) or document furnished pursuant hereto, or any
omission to state any material fact required to make the statements herein or
therein contained complete and not misleading, immediately upon the discovery
of such untrue statement or omission, accompanied by a written supplement to
any Exhibit or Schedule to this Agreement that may be affected thereby;
provided, however, that the disclosure of such untrue statement or omission
shall not prevent Buyer from terminating this Agreement pursuant to
Section 8.1(b), below, at any time at or prior to the Closing in respect of
any original untrue or misleading statement;
(f) Within thirty (30) days after the date of this Agreement,
deliver to Buyer the Disclosure Schedule; and
(g) Promptly commence and diligently prepare, file and process, at
Seller's cost and expense, all the necessary Regulatory Approvals from
Governmental Entities that specifically relate to the title insurance
business and the change of ownership of such business
22
from Seller to Buyer; provided, however, that Buyer expressly acknowledges
and agrees that (i) such approvals are burdensome and may take several months
to obtain; and (ii) Buyer shall not have a right to terminate this Agreement
under Section 8.1(b), below, so long as Seller is diligently attempting to
obtain such Regulatory Approvals. Buyer shall cooperate with Seller to the
extent reasonably requested by Seller in obtaining the above Regulatory
Approvals.
7.2 COVENANTS OF BUYER. During the period from the date hereof to the
Closing Date, Buyer shall:
(a) Comply promptly with all applicable Legal Requirements imposed
upon it with respect to the transactions contemplated by this Agreement, and
shall cooperate promptly with, and furnish information to, Seller in
connection with any such requirements imposed upon Seller or Company or upon
any of Seller's or Company's Affiliates in connection therewith or herewith;
(b) Use its best efforts to obtain any consent, authorization or
approval of, or exemption by, any Person required to be obtained or made by
Buyer in connection with the transactions contemplated by this Agreement;
(c) Use its best efforts to bring about the satisfaction of the
conditions precedent to Closing set forth in Section 3.5 of this Agreement;
and
(d) Promptly advise Company orally and, within three (3) business
days thereafter, in writing of any change in Buyer's business or condition
that has had or would reasonably be expected to have a Material Adverse
Effect on Buyer;
7.3 TAX ADVICE. Seller, Company and Buyer acknowledge that they have
each received their own independent tax advice with respect to this Agreement
and the transactions contemplated thereby, and are not in any way relying on
any statements or advice of any other Party or any of such other Party's
officers, directors, employees, agents or representatives with respect to
such matters.
7.4 ACCESS AND INFORMATION.
(a) During the period commencing on the date hereof and ending
forty (40) days thereafter, Seller shall cause Company to afford to Buyer and
to Buyer's accountants, counsel, and other representatives, reasonable access
during regular business hours and without undue interruption to its business
to all of its properties, books, contracts, commitments, records and
personnel and, during such period, to cause Company to furnish promptly to
Buyer all information concerning its business, properties and personnel as
Buyer may reasonably request.
23
(b) Except to the extent permitted by the provisions of
Section 7.7, below, Buyer shall hold in confidence, and shall use reasonable
efforts to ensure that its employees and representatives hold in confidence,
all such information supplied to it by Seller or Company concerning Company and
shall not disclose such information to any third Person except as may be
required by any Legal Requirement and except for information that (i) is or
becomes generally available to the public other than as result of disclosure by
Buyer or its representatives; (ii) becomes available to Buyer or its
representatives from a third party other than Seller or Company, and Buyer or
its representatives have no reason to believe that such third party is not
entitled to disclose such information; (iii) is known to Buyer or its
representatives on a non-confidential basis prior to its disclosure by Seller
or Company; or (iv) is made available by Seller or Company to any other
Person on a non-restricted basis. Buyer's obligations under the foregoing
sentence shall expire on the Closing Date or, if the Closing does not occur,
one (1) year after the date hereof.
7.5 EXPENSES. All costs and expenses (including, without limitation,
all legal fees and expenses and costs) incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the Party
incurring the same.
7.6 CERTAIN NOTIFICATIONS. At all times from the date hereof to the
Closing Date, each Party shall promptly notify the others in writing of the
occurrence of any event that will or reasonably would be expected to result
in the failure to satisfy any of the conditions specified in Sections 3.4 and
3.5, above.
7.7 PUBLICITY. At all times prior to the Closing Date, each Party
shall obtain the consent of all other Parties hereto prior to issuing, or
permitting any of its directors, officers, employees or agents to issue, any
press release or other information to the press, employees of Company or any
third party with respect to this Agreement or the transactions contemplated
hereby; provided, however, that no party shall be prohibited from supplying
any information to any of its representatives, agents, attorneys, advisors,
and others to the extent necessary to complete the transactions contemplated
hereby so long as such representatives, agents, attorneys, advisors, and
others are made aware of the terms of this Section 7.7. Nothing contained in
this Agreement shall prevent any party to this Agreement at any time from
furnishing any required information to any Governmental Entity or authority
pursuant to a Legal Requirement or from complying with its legal or
contractual obligations; provided that the Party furnishing such information
shall have used its reasonable best efforts to comply with this provision
first, and in any event does so only with the advice of counsel.
7.8 FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement, each of
the Parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Legal
24
Requirements, to consummate and make effective the transactions contemplated
by this Agreement.
(b) If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the
proper officers or directors of Seller, Company and Buyer, as the case may
be, shall take or cause to be taken all such necessary or convenient action
and execute, and deliver and file, or cause to be executed, delivered and
filed, all necessary or appropriate documentation.
7.9 POST-CLOSING EMPLOYMENT. Company shall terminate all of its
employees as of the Closing Date. Company and Sellers acknowledge and agree
that after the Closing Date (i) Buyer shall not be required to employ or
retain any employee of Company or any other Person; and (ii) Buyer, in its
sole and absolute discretion, may cause Company to retain all, some, or none
or such employees.
7.10 EMPLOYEE BENEFITS. With respect to those employees of Company
retained by Buyer pursuant to Section 7.9, above, as of the Closing Date, the
Company's Benefit Arrangements and Employee Plans shall either be fully
maintained by Buyer for such employees, or such employees and their eligible
dependents, shall be consolidated into Buyer's Benefit Arrangements and
Employee Plans with full takeover provisions ("Buyer Coverage"), such that,
among other things, such employees and their eligible dependents who receive
Buyer Coverage are (i) credited for service with Company to be applied
against all service and waiting periods under Buyer Coverage; (ii) credited
for any deductibles paid for the plan year under Company's Benefit
Arrangements and Employee Plans to be applied against any deductibles under
Buyer Coverage; and (iii) not excluded from Buyer Coverage for any
pre-existing condition if such employee or eligible dependent was entitled to
coverage under Company's Benefit Arrangements and Employee Plans as of the
Closing Date.
7.11 POST-CLOSING UNDERWRITING AND OTHER CONTRACTUAL OBLIGATIONS.
Except as otherwise expressly set forth in this Section 7.11, all of the
terms and conditions of any and all pre-Closing contracts or agreements
between Fidelity National Financial, Inc., a Delaware corporation, and its
Subsidiaries and Affiliates (collectively, "Fidelity"), on the one hand, and
Buyer, on the other hand (collectively, the "Fidelity Contracts"), shall
survive the Closing and each Fidelity Contract shall remain in full force and
effect for the duration of the respective term of such Fidelity Contract.
Notwithstanding the preceding sentence:
(a) With respect to any Trustee Sale Guaranty commitment
originated by Buyer post-Closing, Buyer shall be entitled to underwrite the
first One Hundred Thousand Dollars ($100,000) of such commitment with Company
or underwrite the entire commitment with Fidelity. If Buyer elects to
underwrite the first One Hundred Thousand Dollars ($100,000) of such
commitment with Company, then Buyer shall have Fidelity reinsure the
remaining portion of such commitment in excess of One Hundred Thousand
Dollars ($100,000) and pay Fidelity a fee equal to six percent (6%) of the
gross policy premium as and for a reinsurance fee.
25
If Buyer elects to have Fidelity underwrite the entire commitment, then Buyer
shall pay Fidelity a fee of eleven percent (11%) of the gross policy premium
in connection with each Trustee Sale Guaranty Policy;
(b) With respect to any post-Closing non-Trustee Sale Guaranty
commitments in a county in which Buyer is currently licensed (such counties
are listed on Exhibit "B" hereto), Buyer shall underwrite the entire
commitment with Fidelity and pay Fidelity a fee equal to eleven percent (11%)
of the gross policy premium, as provided under the current Fidelity Contracts;
(c) With respect to any post-Closing non-Trustee Sale Guaranty
commitments originated by or referred to Buyer in a county not listed on
Exhibit "B" hereto, Buyer shall be entitled to underwrite the first Fifty
Thousand Dollars ($50,000) of such commitment with Company or underwrite the
entire commitment with Fidelity. If Buyer elects to underwrite the first
Fifty Thousand Dollars ($50,000) of such commitment with Company, then Buyer
shall have Fidelity reinsure the remaining portion of such commitment in
excess of Fifty Thousand Dollars ($50,000) and pay Fidelity a fee equal to
six percent (6%) of the gross policy premium as and for a reinsurance fee. If
Buyer elects to have Fidelity underwrite the entire commitment, then Buyer
shall pay Fidelity a fee of eleven percent (11%) of the gross policy premium,
as provided under the current Fidelity Contracts;
(d) Post-Closing, Buyer shall (i) continue to pay Fidelity a
monthly fee of one percent (1%) of total gross policy premiums generated by
Buyer in the immediately preceding month, regardless of the underwriter
utilized, in consideration for certain services provided to Buyer pre-Closing
under the Fidelity Contracts, including accounting, legal, trust accounting,
human resources and payroll; and (ii) for the first twenty-four (24)
consecutive months following the Closing, pay Fidelity a fee of $8,333.33 per
month in consideration for claims processing services for Company,
preparation and filing of Form 9s for Company, and agency processing services
for Company. If after the twenty-fourth (24th) month following the Closing,
Buyer elects to continue to utilize the services of Fidelity set forth in
clause (ii), above, then such services shall be provided to Buyer by Fidelity
upon such terms and conditions as Buyer and Fidelity shall mutually agree; and
(e) Fidelity shall continue to manage Company's investment
portfolio post-Closing. In consideration for such services, Company shall
pay Fidelity a monthly fee equal to 1.67 basis points of Company's average
investment balance managed by Fidelity for the immediately preceding month.
7.12 USE OF NAME. Seller and/or an Affiliate of Seller owns or has an
interest in the name American Title Insurance Company. Seller on behalf of
itself and its Affiliates hereby authorizes Buyer to use such name, or a
derivation thereof, for Company post-Closing.
26
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) By mutual consent of Seller and Buyer;
(b) By Seller, on the one hand, or by Buyer, on the other hand, if
there has been a breach, failure to fulfill or default (collectively, a
"Breach") on the part of the other Party (the "Breaching Party") of any of
the representations and warranties contained herein or in the due and timely
performance and satisfaction of any of the covenants, agreements or
conditions contained herein; or
(c) By Seller, on the one hand, or by Buyer, on the other hand, if
there shall be a final non-appealable order of a Governmental Entity or
arbitrator in effect preventing consummation of the transactions contemplated
hereby; or there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the
transactions contemplated hereby by any Governmental Entity or arbitrator
which would make the consummation of such transactions illegal.
8.2 EFFECT OF TERMINATION. In the case of any termination of this
Agreement pursuant to Section 8.1, above, this Agreement shall forthwith
become void, and there shall be no Liability or obligation on the part of any
Party or its officers, directors or shareholders. Notwithstanding the
foregoing sentence, (i) the provisions of Section 7.4 and 7.5 shall remain in
full force and effect and survive any termination of this Agreement; (ii)
each Party shall remain liable for any Breach of this Agreement prior to its
termination; and (iii) in the event of termination pursuant to Section
8.1(b), above, then notwithstanding the provisions of Section 7.5, above, the
Breaching Party shall be liable to the non-breaching Party to the extent of
the expenses incurred by such other party in connection with this Agreement
and the transactions contemplated thereby.
8.3 AMENDMENT. This Agreement may be amended at any time by a written
instrument executed by the Parties. Any amendment effected pursuant to this
Section 8.3 shall be binding upon all Parties.
8.4 WAIVER. Any term or provision of this Agreement may be waived in
writing at any time by the Party or Parties entitled to the benefits thereof.
Any waiver effected pursuant to this Section 8.4 shall be binding upon all
Parties hereto. No failure to exercise and no delay in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude the exercise of
any other right, power or privilege. No waiver of any Breach of any covenant
or agreement hereunder shall be deemed a waiver of a preceding or subsequent
breach of the same or any
27
other covenant or agreement. The rights and remedies of each Party under this
Agreement are in addition to all other rights and remedies, whether at law,
in equity or otherwise, that such Party may have against the other Parties.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer and Seller contained in this Agreement or in any
writing delivered pursuant hereto or at the Closing shall survive the Closing
and the consummation of the transactions contemplated hereby for a period of
eighteen (18) months after the Closing Date; provided that the
representations and warranties contained in Sections 4.2, 4.4, 4.11, 4.20,
and 5.2 shall continue until the expiration of the applicable statutes of
limitations.
9.2 INDEMNIFICATION BY SELLER. Seller covenants and agrees with Buyer
and its officers, directors, employees, shareholders, assigns, successors and
affiliates (a "Buyer Indemnified Party") to indemnify and hold harmless a
Buyer Indemnified Party from, against and in respect of any and all Losses
suffered, sustained, incurred or paid by any Buyer Indemnified Party in
connection with resulting from or arising out of, directly or indirectly:
(a) any breach of any representation or warranty of Seller set
forth in this Agreement or any certificate, document or instrument delivered
by or on behalf of Seller in connection herewith; or
(b) any non-fulfillment of any covenant or agreement on the part
of Seller or Company in this Agreement.
Payment shall not be a condition precedent to recovery under the above
indemnities.
9.3 INDEMNIFICATION BY BUYER. Buyer covenants and agrees with Seller
and its officers, directors, employees, shareholders, assigns, successors and
affiliates (a "Seller Indemnified Party") to indemnify and hold harmless a
Seller Indemnified Party from, against and in respect of any and all Losses
suffered, sustained, incurred or paid by any Seller Indemnified Party in
connection with resulting from or arising out of, directly or indirectly:
(a) any breach of any representation or warranty of Buyer set
forth in this Agreement or any certificate, document or instrument delivered
by or on behalf of Buyer in connection herewith; or
28
(b) any non-fulfillment of any covenant or agreement on the part
of Buyer in this Agreement.
Payment shall not be a condition precedent to recovery under the above
indemnities.
9.4 THIRD-PARTY CLAIMS. In the event any third party asserts any Claim
with respect to any matter as to which the indemnities in this Agreement
relate, the Party or Person against whom the Claim is asserted (the
"Indemnified Party") shall give prompt notice to the other Party or Person
(the "Indemnifying Party"), and the Indemnifying Party shall have the right
at its election to take over the defense or settlement of the third-party
Claim at its own expense by giving prompt notice to the Indemnified Party. If
the Indemnifying Party does not give such notice and does not proceed
diligently so to defend the third-party Claim within thirty (30) days after
receipt of the notice of the third-party Claim, the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may make as
to those claims and shall reimburse the Indemnified Party for its Losses
related to the defense or settlement of the third-party Claim, including all
costs and expenses (including reasonable attorneys' fees and costs) incurred
by the Indemnified Party in defending such Claim. The Parties shall cooperate
in defending against any asserted third-party Claims. For purposes of this
Article 9, the reference to this Agreement includes any certificate,
Disclosure Schedule, Exhibit, list, summary or other information provided or
delivered to a party by the Indemnifying Party or its agents and affiliates
in connection with this Agreement.
9.5 ADDITIONAL INDEMNIFICATION PROVISIONS. Notwithstanding anything to
the contrary in this Article 9, (i) Seller's and Buyer's aggregate Liability
to each other under Sections 9.2 and 9.3, respectively, shall not exceed One
Million Dollars ($1,000,000); (ii) Seller and Buyer shall not incur any
Liability to each other under Sections 9.2 and 9.3, respectively, until the
aggregate amount of the indemnification obligations exceeds Fifty Thousand
Dollars ($50,000); (iii) Seller and Buyer shall not incur any Liability to
each other under Sections 9.2 and 9.3, respectively, for an individual
indemnification Claim less than One Thousand Dollars ($1,000); and (iv) in
lieu of payment from Seller to Buyer of a valid indemnification Claim under
Section 9.2, above, Buyer may elect to reduce the principal balance due under
the Promissory Note by the amount of such valid Claim.
9.6 INDEMNIFICATION NON-EXCLUSIVE. Subject to the limitations set
forth in Sections 9.1 and 9.5, above, the indemnification provisions of this
Article 9 are in addition to, and not in derogation of, any statutory,
equitable or common-law remedy any Party may have for breach of
representation, warranty, covenant or agreement.
9.7 ACCESS AND INFORMATION. With respect to any Claim for
indemnification hereunder, the Indemnified Party will give to the
Indemnifying Party and its counsel, accountants and other representatives
full and free access during normal business hours and upon the giving of
reasonable prior notice to their books and records relating to such Claims,
and to their employees, accountants, counsel and other representatives, all
without charge to
29
the Indemnifying Party, except for reimbursement of reasonable out-of-pocket
expenses. The Indemnified Party agrees to maintain any of its books and
records which may relate to a Claim for indemnification hereunder for such
period of time as may be necessary to enable the Indemnifying Party to
resolve such Claim; provided that the failure to do so shall not relieve the
Indemnifying Party of any obligation hereunder unless the Indemnifying Party
demonstrates that the failure to do so substantially prejudiced the
Indemnifying Party in the defense of any third-party proceeding, and then
only to the extent so prejudiced.
9.8 MITIGATION. The Indemnified Parties agree to mitigate their Losses
and use their reasonable efforts to collect any indemnifiable damages from
any available insurer or third-party indemnitors before collecting from the
Indemnifying Party; provided, however, nothing in the foregoing sentence
shall preclude any Indemnified Party from filing a Claim against the
Indemnifying Party from the outset. If any amounts are recovered from an
insurer or third party after payment to an Indemnified Party, the recovering
party (or parties) shall promptly pay over to such Indemnifying Party (or
Parties) any such recovered amounts, but only to the extent of any Losses
with respect to such matter.
9.9 RIGHT OF SET-OFF. Any Party to this Agreement shall be entitled to
set-off against any amounts due to another Party under the terms of this
Agreement or under any additional agreement, any amounts due from such other
Party under the terms of this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California.
10.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
Parties hereto.
10.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement among the Parties with regard to the
subject matter hereof and no Party shall be liable or bound to any other
Party in any manner by any representations, warranties, covenants, or
agreements except as specifically set forth herein or therein. Nothing in
this Agreement, express or implied, is intended to confer upon any Person,
other than the Parties hereto and their respective successors and assigns,
any rights, remedies, obligations, or Liabilities under or by reason of this
Agreement, except as expressly provided herein.
30
10.4 SEVERABILITY. In the event any provision of this Agreement shall
be invalid, illegal, or unenforceable, it shall, to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the Parties, and the validity, legality,
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
10.5 NOTICE. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(i) if delivered personally (including by overnight express or messenger),
upon delivery; (ii) if delivered by registered or certified mail, return
receipt requested, upon the earlier of actual delivery or three (3) days
after being mailed; or (iii) if given by facsimile, upon confirmation of
transmission by facsimile, in each case to the Parties at the following
addresses:
(a) If to Seller or Company (pre-Closing), addressed to:
Fidelity National Title Insurance Company of New York
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fidelity National Financial, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer or Company (post-Closing), addressed to:
American Title Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.6 CONSTRUCTION. Parties to this Agreement have participated jointly
in the negotiation and drafting of this Agreement and have had competent
counsel of their own choosing. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
31
10.7 HEADINGS. The headings of the Articles and Sections of this
Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
10.8 COUNTERPARTS. This Agreement may be executed by facsimile and in
any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
10.9 RECITALS, SCHEDULES, AND EXHIBITS. The Recitals, Schedules and
Exhibits to this Agreement are incorporated herein and, by this reference,
made a part hereof as if fully set forth at length herein.
[SIGNATURES ON FOLLOWING PAGE]
32
IN WITNESS WHEREOF, the foregoing Agreement and Plan of Reorganization
is hereby executed as of the date first above written.
SELLER:
FIDELITY NATIONAL TITLE INSURANCE
COMPANY OF NEW YORK, a New York
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Its: E.V.P
------------------------------------
COMPANY:
NATIONAL TITLE INSURANCE OF NEW
YORK, INC., a New York corporation
By: /s/ [Illegible]
------------------------------------
Its: E.V.P. and C.F.O.
------------------------------------
BUYER:
AMERICAN TITLE COMPANY, a California
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Its:
------------------------------------
ACCEPTED AND AGREED TO WITH
RESPECT TO SECTION 7.11 ONLY:
FIDELITY NATIONAL FINANCIAL, INC., a
Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Its: President
------------------------------------
33
EXHIBIT "A"
PROMISSORY NOTE
$2,000,000 _________________ ,1998
FOR VALUE RECEIVED, AMERICAN TITLE COMPANY, a California corporation
("Obligor"), promises to pay to FIDELITY NATIONAL TITLE INSURANCE COMPANY OF
NEW YORK, a New York corporation ("Holder"), at ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or order, the principal sum of Two Million Dollars
($2,000,000), together with interest thereon at the rate of ten percent (10%)
per annum for actual days elapsed.
This Promissory Note is being delivered by Obligor to Holder in
accordance with Sections 2.2 and 3.3(a) of that certain Stock Purchase
Agreement (the "Agreement"), dated March __ ,1998, by and among Obligor,
Holder and National Title Insurance Company of New York, Inc., a New York
corporation ("Company"), pursuant to which Obligor purchased from Holder all
of the outstanding capital stock of Company. The principal balance due
hereunder is subject to reduction pursuant to Section 9.5(iv) of the
Agreement.
Principal and interest due hereunder shall be amortized over a period of
five (5) years, and paid by Obligor to Holder in equal monthly installments
commencing on ________ 1, 1998, and continuing for each consecutive month
thereafter through and including _________ 1, 2008. For purposes of
clarification, such payments shall be due and payable in accordance with the
Payment and Amortization Schedule attached hereto as Exhibit "A."
Obligor may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will be applied first to unpaid
interest and then to reduce principal.
Obligor will be in default of this Promissory Note if any of the
following events occur (an "Event of Default"): (a) Obligor fails to make any
payment when due, which default is not cured within ten (10) days; (b)
Obligor breaks any promise Obligor has made to Holder, or Obligor fails to
perform any of its obligations promptly at the time and in the manner
provided in this Promissory Note, the Agreement or in any other agreement or
loan Obligor has with Holder; (c) any representation or statement made to
Holder by Obligor or on Obligor's behalf is false or misleading in any
material respect; or (d) either Obligor becomes insolvent, a receiver is
appointed for all or any part of Obligor's property, Obligor makes an
assignment for the benefit of creditors, or any proceeding is commenced by
Obligor or against Obligor under any bankruptcy or insolvency laws.
Upon the occurrence of an Event of Default the entire unpaid principal
amount, together with all unpaid interest accrued thereon, shall be
immediately due and payable and Holder may proceed to exercise any rights or
remedies it may have under this Promissory Note or such other rights and
remedies that Holder may have at law, in equity or otherwise.
In the event this Promissory Note is turned over to an attorney at law
for collection after an Event of Default, in addition to the principal
balance and all accrued interest, Holder shall be entitled to recover from
Obligor all costs of collection, including but not limited to reasonable
attorneys' fees, and all such costs and expenses shall be payable on demand.
Obligor hereby waives diligence, presentment, protest and demand, notice
of protest, dishonor and nonpayment of this Promissory Note and expressly
agrees that, without in any way affecting the liability of Obligor hereunder,
Holder may extend the time for payment of principal and/or interest
hereunder. Obligor further waives, to the fullest extent permitted by law,
the right to plead any and all statute of limitations as a defense to any
demand on this Promissory Note.
No failure on the part of Holder to exercise any right or remedy
hereunder, whether before or after an Event of Default, shall constitute a
waiver thereof, and no waiver of any past Event of Default shall constitute a
waiver of any future Event of Default.
This Promissory Note may not be modified or amended orally, but only by
an agreement in writing signed by the party against whom such change is
sought.
Should any one or more of the provisions of this Promissory Note be
determined illegal or unenforceable, all other provisions shall nevertheless
remain effective.
This Promissory Note has been delivered to Holder and accepted by Holder
in the State of California. If there is a lawsuit, Obligor agrees upon
Holder's request to submit to the jurisdiction of the courts of the State of
California. This Promissory Note shall be governed by and construed in
accordance with the laws of the State of California as those laws are applied
to written contracts between residents of said jurisdiction to be performed
within said jurisdiction.
IN WITNESS WHEREOF, Obligor, intending to be legally bound hereby, has
caused this Promissory Note to be duly executed and delivered as of the day
and year first above written.
AMERICAN TITLE COMPANY, a
California corporation
By:
------------------------------
Its:
------------------------------
2
EXIBIT "A"
PAYMENT AMORTIZATION SCHEDULE
PRINCIPLE AMOUNT: $2.000,000
INTEREST RATE: 10%
LIFE OF LOAN (MONTHS): 60
Payment Interest Principle Remaining
Month: Amount Amount: Amount: Principle:
--------- --------- --------- --------- ------------
1 42,494.09 16,666.67 25,827.42 1,974,172.58
2 42,494.09 16,451.44 26,042.65 1,948,129.93
3 42,494.09 16,234.42 26,259.67 1,921,870.25
4 42,494.09 16,015.59 26,478.50 1,895,391.75
5 42,494.09 15,794.93 26,699.16 1,868,692.59
6 42,494.09 15,572.44 26,921.65 1,841,770.94
7 42,494.09 15,348.09 27,146.00 1,814,624.94
8 42,494.09 15,121.87 27,372.21 1,787,252.73
9 42,494.09 14,893.77 27,600.32 1,759,652.41
10 42,494.09 14.663.77 27,830.32 1,731,822.09
11 42,494.09 14,431.85 28,062.24 1,703,759.85
12 42,494.09 14,198.00 28,296.09 1,675,463.76
13 42,494.09 13,962.20 28,531.89 1,646,931.87
14 42,494.09 13,724.43 28,769.66 1,618,162.21
15 42,494.09 13,484.69 29,009.40 1,589,152.81
16 42,494.09 13,242.94 29,251.15 1,559,901.66
17 42,494.09 12,999.18 29,494.91 1,530,406.75
18 42,494.09 12,753.39 29,740.70 1,500,666.05
19 42,494.09 12,505.55 29,988.54 1,470,677.51
20 42,494.09 12,255.65 30,238.44 1,440,439.07
21 42,494.09 12,003.66 30,490.43 1,409,948.64
22 42,494.09 11,749.57 30,744.52 1,379,204.12
23 42,494.09 11,493.37 31,000.72 1,348,203.40
24 42,494.09 11,235.03 31,259.06 1,316,944.34
25 42,494.09 10,974.54 31,519.55 1,285,424.78
26 42,494.09 10,711.87 31,782.22 1,253,642.57
27 42,494.09 10,447.02 32,047.O7 1,221,595.50
28 42,494.09 10,179.96 32,314.13 1,189,281.37
29 42,494.09 9,910.68 32,583.41 1,156,697.96
30 42,494.09 9,639.15 32,854.94 1,123,843.02
31 42,494.09 9,365.36 33,128.73 1,090,714.29
32 42,494.09 9,089.29 33,404.80 1,057,309.49
33 42,494.09 8.810.91 33,683.18 1,023,626.31
34 42,494.09 8,530.22 33,963.87 989,662.44
35 42,494.09 8,247.19 34.246.90 955,415.54
36 42,494.09 7,961.80 34,532.29 920,883.24
37 42,494.09 7,674.03 34,820.06 886,063.18
38 42,494.09 7,383.86 35,110.23 850,952.95
39 42,494.09 7,091.27 35,402.81 815,550.14
40 42,494.09 6,796.25 35,697.84 779,852.30
41 42,494.09 6,498.77 35,995.32 743,856.98
42 42,494.09 6,198.81 36,295.28 707,561.70
43 42,494.09 5,896.35 36,597.74 670,963.95
44 42,494.09 5,591.37 36,902.72 634,061.23
45 42,494.09 5,283.84 37,210.25 596,850.99
46 42,494.09 4,973.76 37,520.33 559,330.65
47 42,494.09 4,661.09 37,833.00 521,497.65
48 42,494.09 4,345.81 38,148.28 483,349.38
49 42,494.09 4.027.91 38,466.18 444,883.20
50 42,494.09 3,707.36 38,786.73 406,096.47
51 42,494.09 3,384.14 39,109.95 366,986.52
52 42,494.09 3,058.22 39,435.87 327,550.65
53 42,494.09 2,729.59 39,764.50 287,786.15
54 42,494.09 2,398.22 40,095.87 247,690.28
55 42,494.09 2,064.09 40,430.00 207,260.27
56 42,494.09 1,727.17 40,766.92 166,493.35
57 42,494.09 1,387.44 41,106.64 125,386.71
58 42,494.09 1,044.89 41,449.20 83,937.51
59 42,494.09 699.48 41,794.61 42,142.90
60 42,494.09 351.19 42,142.90 (0.00)
EXHIBIT "B"
LIST OF COUNTIES
Alameda
Contra Costa
Fresno
▇▇▇▇
Los Angeles
Maricopa
Orange
Riverside
Sacramento
San Bernadino
San Diego
San Mateo
Santa ▇▇▇▇▇▇▇
Santa ▇▇▇▇▇
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