Exhibit 7.7
ASSET PURCHASE AGREEMENT
between
FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.,
and
XXXXXXXXXXX.XXX, INC.
Dated as of October 25, 2001
THIS ASSET PURCHASE AGREEMENT, is made and entered into as of October 25,
2001, by and between Fidelity National Information Solutions, Inc., a Delaware
corporation ("Buyer"), and XxxxXxxxxxx.xxx, Inc., a Nevada corporation
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("Seller").
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R E C I T A L S:
A. Seller is engaged in the business of providing certain services to the
real estate industry. One of those businesses, referred by Seller as
XMLSweb(TM), which is the subject of this Agreement (hereinafter, the
"Business"), is an Intranet MLS System that provides an efficient,
cost-effective method for MLS Organizations and Realtor Associations to
implement a customized agent-access Intranet System. The products of the
Business are designed to provide the agent more efficient electronic access to
MLS data by providing flexible and cost-effective, web based alternatives to
existing systems that an MLS may be using.
B. Buyer wishes to acquire from Seller, and Seller wishes to sell, assign
and transfer to Buyer, substantially all of the assets of the Business,
including Seller's corporate and trade names and goodwill associated with the
Business, all for the purchase price and upon the terms and subject to the
conditions hereinafter set forth.
C. Seller wishes to provide certain representations and warranties
hereunder.
D. Capitalized terms used herein without separate definition have the
meanings given to such terms in Section 1.1.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties made herein and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definition of Certain Terms. The terms defined in this Section
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1.1, whenever used in this Agreement, shall have the respective meanings
indicated below for all purposes of this Agreement.
"Accounts Receivable": has the meaning set forth in Section 2.1(a).
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"Additional Consideration": has the meaning set forth in Section 3.2.
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"Affiliate": of a specified Person means a Person that directly, or
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indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person or a member of such specified
Person's immediate family. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.
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"Agreement": means this Asset Purchase Agreement, as the same from time to
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time may be amended, supplemented or waived.
"Assets": has the meaning set forth in Section 2.1.
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"Assumed Contracts": has the meaning set forth in Section 2.1(e).
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"Assumed Liabilities": has the meaning set forth in Section 3.4.
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"Books and Records": means all books and records, including manuals, price
lists, mailing lists, lists of customers, sales and promotional materials,
purchasing materials, personnel records, accounting records, tax records and
litigation files (regardless of the media in which stored), in each case
primarily relating to or primarily used in the Business and relating to the
Assets.
"Buyer Indemnitees": has the meaning set forth in Section 9.1.
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"Business": has the meaning set forth in Recital A.
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"Cash": means any and all cash and cash equivalents and similar type
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investments, such as certificates of deposit, treasury bills and other
marketable securities.
"Closing": has the meaning set forth in Section 3.1.
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"Closing Consideration": has the meaning set forth in Section 3.2.
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"Closing Date": has the meaning set forth in Section 3.1.
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"Code": means the Internal Revenue Code of 1986, as amended.
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"Competitive Products and Services": has the meaning set forth in Section
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6.1.8.
"Confidentiality Agreement": means that certain Mutual Confidentiality and
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Non-Disclosure Agreement executed by Seller and Buyer on October __, 2001.
"Consent": means any consent, approval, authorization, waiver, permit,
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grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including any Governmental Authority.
"Contracts": has the meaning set forth in Section 4.12(a).
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"Deposit": has the meaning set forth in section 3.2.
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"Employee Benefit Plan": means each "employee benefit plan" of Seller, as
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such term is defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, and (ii) is maintained or contributed to by Seller.
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"Employee Plan": means each "employee benefit plan" of Buyer, as such term
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is defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, and (ii) is maintained or contributed to by Buyer.
"Environmental Laws": means any and all Laws relating to the protection of
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the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, holding, abatement, existence, Release,
threatened Release, arranging for the disposal or transportation of any
Hazardous Substances.
"Environmental Liabilities and Costs": means any and all Losses imposed by,
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under or pursuant to Environmental Laws, based on, arising out of or otherwise
in respect of (i) the ownership or operation of the Business or any real
property owned, leased or operated by Seller, or (ii) the environmental
conditions existing on the Closing Date on, under, above, or about any real
property owned, leased or operated by the Business or Seller.
"ERISA": means the Employee Retirement Income Security Act of 1974, as
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amended.
"Excluded Assets": has the meaning set forth in Section 2.2.
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"Excluded Liabilities": has the meaning set forth in Section 3.5.
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"FF&E": has the meaning set forth in Section 2.1(b).
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"Financial Statements": has the meaning set forth in Section 4.4.
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"FNF Secured Loans": means (i) that certain Secured Promissory Note dated
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October 23, 2001, pursuant to which Fidelity National Financial, Inc. loaned
Seller $400,000 to fund a payroll amount due and payable on October 23, 2001;
and (ii) that certain Revolving Credit Agreement and Security Agreement of even
date herewith pursuant to which FNF has agreed to make available and Seller has
agreed to borrow certain revolving advances in an aggregate principal amount not
to exceed $4,000,000, to allow the Borrower, among other things, to pay off and
cancel the Homemark Secured Loans.
"GAAP": means United States generally accepted accounting principles.
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"Governmental Approval": means any Consent of, with or to any Governmental
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Authority.
"Governmental Authority": means any nation or government, any state or
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other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any government authority, agency, department, board,
commission or instrumentality of the United States, any State of the United
States or any political subdivision thereof), or any tribunal or arbitrator(s)
of competent jurisdiction, or any self-regulatory organization.
"Hazardous Substance": means any substance that: (i) requires
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investigation, removal or remediation under any Environmental Law, or is
defined, listed or identified as
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a "hazardous waste" or "hazardous substance" thereunder; or (ii) is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is regulated by any Governmental Authority
or Environmental Law.
"Homemark Secured Loans": means (i) that certain Securities Purchase
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Agreement between Seller and X-Xxxx.xxx, Inc. d/b/a Homemark ("Homemark") dated
as of June 6, 2001 (the "Homemark Securities Purchase Agreement"), wherein
Homemark agreed to lend and Seller agreed to borrow up to $2,000,000; (ii) that
certain Loan Agreement dated as of June 6, 2001 (the "Homemark Loan Agreement"),
wherein Homemark agreed to lend and Seller agreed to borrow $1,000,000; (iii)
that certain Security Agreement and Financing Statement dated as of June 6,
2001, wherein Seller granted to Homemark security interests in certain of its
assets; that certain Promissory Note dated June 6, 2001, pursuant to which
Homemark loaned to Seller $500,000; (iv) the advance by Homemark to Seller on or
around June 19, 2001, pursuant to the Homemark Loan Agreement, of an additional
$500,000; and (v) the additional advances by Homemark to Seller, subsequent to
June 19, 2001, in the approximate aggregate amount of $1,000,000.
"Indemnified Party": has the meaning set forth in Section 9.3.
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"Indemnifying Party": has the meaning set forth in Section 9.3.
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"Intellectual Property": means: (i) any and all trademarks, service marks,
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brand names, certification marks, trade dress, assumed names, trade names, logos
and other indications of origin, sponsorship or affiliation, together with the
goodwill associated therewith (whether the foregoing are registered or
unregistered); and registrations thereof in any jurisdiction and applications to
register any of the foregoing in any jurisdiction, and any extension,
modification or renewal of any such registration or application; (ii) any and
all inventions, developments, improvements, discoveries, know how, concepts and
ideas, whether patentable or not in any jurisdiction; (iii) any and all patents,
revalidations, industrial designs, industrial models and utility models, patent
applications (including reissues, continuations, divisions,
continuations-in-part and extensions) and patent disclosures; (iv) any and all
mask works and other semiconductor chip rights and registrations thereof; (v)
any and all trade secrets and proprietary or confidential information and rights
in any jurisdiction to limit the use or disclosure thereof by any Person; (vi)
any and all writings and other works, whether copyrighted, copyrightable or not
in any jurisdiction, including computer programs and software (including source
code, object code, data and databases); (vii) any and all copyrights, copyright
registrations and applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and (viii) any and all
other intellectual property or proprietary rights.
"IRS": means the Internal Revenue Service.
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"Law": means any and all provisions of any and all (i) constitutions,
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treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, and (ii) orders,
decisions, injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority.
"Lien": means any mortgage, pledge, hypothecation, right of others, claim,
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security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or
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interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest, equity, option, lien,
right of first refusal, charge or other restriction or limitation, including,
without limitation, any Lien under the FNF Secured Loans or the Homemark Secured
Loans.
"Logo": means any symbol or logo incorporating a Name.
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"Losses": has the meaning set forth in Section 9.1.
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"Material Adverse Effect": means any event, circumstance, occurrence, fact,
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condition, change or effect that is materially adverse to the business,
operations, results of operations, financial condition, prospects, properties,
assets or liabilities of the Business taken as a whole.
"Name": means any name, xxxx, trade name, trademark, service name or
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service xxxx.
"Other Inventories": has the meaning set forth in Section 2.1(c).
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"Person": means any natural person, firm, partnership, association,
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corporation, company, limited liability company, trust business trust,
Governmental Authority or other entity.
"Purchase Price": has the meaning set forth in Section 3.2.
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"Release": means any releasing, disposing, discharging, injecting,
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spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including the
moving of any materials through, into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment.
"Software Development Agreement": has the meaning set forth in Section
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17.2.10.
"Specifications": has the meaning set forth in Section 7.2.10.
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"Subsidiaries": means each corporation or other Person in which a Person
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owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50 percent of the outstanding voting stock or
other equity interests.
"Taxes": means any federal, state, provincial, local or foreign income,
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alternative, minimum, accumulated earnings, personal holding company, franchise,
capital stock, net worth, capital, profits, windfall profits, gross receipts,
value added, sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental, real property, personal property, ad valorem,
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intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers' compensation, payroll, health
care, withholding, estimated or other similar tax, duty or other governmental
charge or assessment or deficiencies thereof, and including any interest,
penalties or additions to tax attributable to the foregoing.
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"Tax Returns": means any return, report, declaration, form, claim for
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refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof or
supplement thereto.
"Transferred Employee": has the meaning set forth in Section 6.2.5.
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"Version 8 Software": has the meaning set forth in Section 3.2.
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Section 1.2 Construction. All references herein to a Section, Article,
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Exhibit or Schedule are to a Section, Article, Exhibit or Schedule, unless
otherwise indicated.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
Section 2.1 Assets. Subject to and upon the terms and conditions set forth
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in this Agreement, at the Closing, Seller shall sell, transfer, set over,
convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, all right, title and interest of Seller in and to all of Seller's assets
and rights relating to the Business other than the Excluded Assets, as the same
may exist on the Closing Date (collectively, the "Assets"), including, without
limitation, the following assets and rights:
(a) all accounts receivable, notes and drafts owing to Seller relating to
the conduct of the Business ("Accounts Receivable");
(b) all furniture, fixtures, machinery, equipment and other tangible
personal property (including work stations and data processing equipment)
relating to or used in the Business (collectively, the "FF&E");
(c) all inventories of office and other supplies, spare parts and
replacement and component parts related to the Business, whether on hand,
in-transit or on order (collectively, the "Other Inventories");
(d) all rights in Intellectual Property used in the Business (including all
Names and Logos incorporating "XMLSWeb" or any similar Name or Logo, alone or in
any combination of words, and any combination, variation or derivation of any
such Name or Logo or the domain name "XXXXXxx.xxx."), and the goodwill
represented thereby and pertaining thereto;
(e) all rights under the Contracts specifically listed on Schedule 2.1(e)
by Buyer, in its sole discretion, prior to the Closing (the "Assumed Contracts")
and no other Contracts or agreements of Seller;
(f) all Books and Records, except as provided in Section 2.2(a);
(g) all Governmental Approvals, including all applications therefor, to the
extent transferrable;
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(h) all rights to causes of action, lawsuits, claims and demands of any
nature available to or being pursued by Seller with respect to the Business or
the Assets;
(i) all guarantees, warranties, indemnities and similar rights in favor of
Seller with respect to the Business or the Assets; and
(j) all computer hardware and software used in the Business, including all
rights under licenses and other Intellectual Property, instruments or agreements
relating thereto.
Section 2.2 Excluded Assets. Seller shall retain and not transfer, and
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Buyer shall not purchase or acquire, or have any ownership claim or right in
respect of, the following assets (collectively, the "Excluded Assets"):
(a) All Cash of Seller;
(b) all Books and Records that relate solely to Seller's businesses other
than the Business or to corporate records, such as minute books, seals and
similar items and all tax returns and financial statements and records of
Seller;
(c) all rights to causes of action, lawsuits, claims and demands of any
nature available to or being pursued by Seller with respect to the Excluded
Assets;
(d) all refunds, credits, deposits, prepayments or overpayments with
respect to Taxes paid or accrued by Seller;
(e) all insurance policies;
(f) all assets of any Employee Benefit Plan except to the extent otherwise
agreed to herein;
(g) all Names or Logos incorporating "XxxxXxxxxxx.xxx" or any similar Name
or Logo, alone or in any combination of words, and any combination, variation or
derivation of any such Name or Logo or the domain name "Xxxxxxxxxxx.xxx;" and
(h) the IDXnet broker reciprocity product offering, including all computer
hardware and software related solely thereto; but specifically not including any
and all computer hardware, software, rights under licenses and other
Intellectual Property, instruments or agreements also used in connection with
XMLSWeb product offering (the "Shared Software"), it being expressly understood
and agreed by Seller that all such Shared Software constitutes an Asset acquired
by Buyer hereunder.
Section 2.3 Joint Assets. Buyer and Seller acknowledge and agree that
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certain source code contained in software that comprises Assets is also used in
connection with other products currently developed or being developed by Seller
that are not part of the Business ("Shared Source Code"). Following the Closing,
all such Shared Source Code shall be deemed jointly owned by Buyer and Seller
and, subject to Section 6.1.8 below, may be used by Buyer or Seller for any
lawful purpose.
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ARTICLE 3
THE CLOSING
Section 3.1 Place and Date. Subject to the fulfillment of the conditions
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specified in Article VII, any or all of which may be waived by the respective
party or parties whose performance is conditioned upon satisfaction of such
conditions, the purchase and sale of the Assets shall be consummated at a
closing (the "Closing") to be held at the offices of Buyer located at 0000 Xxxxx
Xxxx, Xxxxx 000, Xxxxx Xxxxxxx, Xxxxxxxxxx, on or around November 23, 2002, at
10:00 a.m., or on or at such other date, time or location as Buyer and Seller
shall mutually agree (such date and time being herein referred to as the
"Closing Date").
Section 3.2 Purchase Price. Subject to the terms and conditions set forth
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herein, in full consideration for the purchase of the Assets, Buyer shall pay to
Seller (a) the cash sum of $1,000,000 within two (2) business days following the
satisfaction of the conditions set forth in Sections 7.2.11, 7.2.12 and 7.2.14
below (the "Deposit"), (b) the cash sum of $1,000,000 on the Closing Date (the
"Closing Consideration"), and (c) the possibility of an additional cash sum of
$1,200,000 payable in accordance with the terms and conditions of the Software
Development Agreement related to the development by Seller for the benefit of
Buyer of Version 8 of its MLS software product offering in strict accordance
with the Specifications (the "Version 8 Software") (the "Additional
Consideration"). The Deposit, the Closing Consideration and the Additional
Consideration, if any, is referred to herein as the "Purchase Price." The
Purchase Price shall be made by direct wire transfer of immediately available
funds to the account of Seller as designated by Seller. Upon the termination of
this Agreement, regardless of the reason therefore, the Deposit shall
automatically and without further action by the parties be converted into a loan
payable by Seller to Buyer, with the entire principal amount becoming
immediately due and payable on the date of such termination. If Seller fails to
repay the Deposit when due, then the principal amount shall bear interest at the
maximum rate allowed by law until such time as the entire principal and all
accrued interest is paid in full.
Section 3.3 Allocation of Purchase Price. The parties agree to allocate the
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Purchase Price among the Assets in accordance with Section 1060 of the Code as
mutually agreed to by the parties within 180 days following the Closing Date;
provided that the FF&E, the Other Inventories included in the Assets shall be
allocated an amount equal to Seller's net book value for such Assets. All such
mutually agreed to allocations shall be used by each party in preparing any
filings required pursuant to Section 1060 of the Code or any similar provisions
of state or local law and all relevant income and franchise tax returns. Neither
Buyer nor Seller will take any position before any taxing authority or in any
judicial proceeding that is inconsistent with such mutually agreed to
allocations without the prior consent of the other party. The parties shall in
good faith exercise reasonable efforts to support such reported allocations in
any audit proceedings initiated by any taxing authority.
Section 3.4 Assumption of Liabilities. Subject to the terms and conditions
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set forth herein, including, without limitation, Seller's indemnification
obligations, at the
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Closing, Buyer shall assume and agree to pay, honor and discharge when due the
following obligations of Seller (collectively, the "Assumed Liabilities"):
(a) all liabilities and obligations of related to the Assets arising on and
after the Closing Date; and
(b) all liabilities and obligations of Seller arising on and after the
Closing Date under the Assumed Contracts.
Section 3.5 Excluded Liabilities. Other than the Assumed Liabilities, Buyer
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shall not be responsible for any other debts, claims, commitments, liabilities
or obligations of Seller or the Business (collectively, the "Excluded
Liabilities"). Without limiting the generality of the foregoing and
notwithstanding anything herein that may be to the contrary, Excluded
Liabilities include any and all debts, claims, commitments, liabilities or
obligations of Seller or the Business relating to or arising out of any of the
following:
(a) any indebtedness for borrowed money or any guarantees or similar
obligations in respect of any indebtedness for borrowed money, including,
without limitation, any and all liability, obligations and indebtedness arising
under the FNF Secured Loans and the Homemark Secured Loans;
(b) (i) any liability, obligation or commitment relating to or arising out
of any Employee Benefit Plan, including any sponsorship, administration or
contribution obligation of any Person under any Employee Benefit Plan or
termination of any Employee Benefit Plan, or (ii) the employment or the
termination of employment, on or prior to the Closing Date, of any employee of
the Business by Seller;
(c) any cause of action or judicial or administrative action, suit,
proceeding or investigation, pending or threatened in writing as of the Closing
Date, relating to periods on or prior to the Closing Date; (d) any failure or
alleged failure by Seller to comply with, or any violation or alleged violation
of, (i) any Law or Governmental Approval applicable to the Business or the
Assets, or (ii) any Contract, which occurred or was alleged to have occurred
prior to the Closing Date;
(e) any infringement or alleged infringement of the rights of any other
Person arising out of the use of any Intellectual Property in connection with
the Business prior to the Closing Date;
(f) any and all contingent liabilities arising out of the Business on or
prior to the Closing Date; and any and all liabilities accruable under GAAP for
the Business as of the Closing Date;
(g) any liability for any Taxes imposed on Seller or attributable to Seller
or imposed or attributable to the Business on or before the Closing Date;
(h) any of the Excluded Assets;
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(i) all Environmental Liabilities and Costs (whether or not currently
known, discoverable or regulated by applicable Law) arising from, relating to,
in respect of or incurred in connection with conditions existing or events
occurring prior to the Closing Date; or
(j) any claim, litigation, action or proceeding, whether or not pending
or threatened, whether known or unknown, relating to the Business or the Assets
and arising prior to the Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER,
SHAREHOLDER AND XXXXXX
Seller represents and warrants to Buyer as of the date of this Agreement
and the Closing Date as set forth in this Article 4. All exceptions to the
representations and warranties contained in this Article 4 shall be attached to
this Agreement as individually numbered schedules (collectively, the "Disclosure
Schedules") corresponding to the applicable sections and subsections of this
Article 4. The Disclosure Schedules shall be diligently prepared and delivered
by Seller to Buyer as soon as reasonably practicable, but in no event later than
twenty-five (25) days following the execution of this Agreement. The Disclosure
Schedules are subject to the approval of Buyer in accordance with section 7.2.15
below.
Section 4.1 Corporate Status. Seller is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Nevada.
Seller has full corporate power and authority to carry on the Business as it is
currently conducted, and to own or lease and to operate the properties and
assets of the Business (including the Assets). Seller is duly qualified to do
business and is in good standing in each other jurisdiction in which it owns
property or conducts the Business, except where the failure to so qualify or
remain in good standing would not have a Material Adverse Effect.
Section 4.2 Authorization, etc. Seller has all requisite power and
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authority (corporate or otherwise) to execute and deliver this Agreement, to
perform fully its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery by Seller of this Agreement, and
the consummation of the transactions contemplated hereby, have been duly
authorized by all requisite corporate action of Seller. Seller has duly executed
and delivered this Agreement. This Agreement is a legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting generally the enforcement of
creditors' rights and by general principles of equity.
Section 4.3 No Conflicts, etc. The execution, delivery and performance by
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Seller of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a violation of or a
default under (with or
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without the giving of notice or the lapse of time or both), or result in the
acceleration of or give rise to any party the right to terminate, modify or
cancel under, or result in the loss of any rights, privileges, options or
alternatives under, or result in the creation of any Lien on any of the
properties or assets of Seller (including the Assets) under (a) the Articles of
Incorporation or Bylaws of Seller, (b) any Law applicable to Seller or any of
its properties or assets (including the Assets), or (c) any Contract or other
agreement or instrument to which Seller is a party or by which Seller or any of
the Assets is bound, other than in the case of this clause (c) any such
conflicts, violations or defaults that, individually or in the aggregate, (i)
have not had and could not reasonably be expected to have a Material Adverse
Effect, and (ii) have not impaired and could not reasonably be expected to
impair Seller's ability to perform their obligations hereunder. No Governmental
Approval or other Consent (including Consents under the Contracts) is required
to be obtained or made by Seller in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
Section 4.4 Financial Statements. Seller has delivered to Buyer all
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financial statements filed with the Securities and Exchange Commission ("SEC")
since December 31, 2000 (collectively, the "Financial Statements"). The
Financial Statements, including all related notes and schedules, contain true
and accurate statements of each and all of the assets and liabilities of Seller
and fairly present the financial position of Seller as at the respective dates
thereof, and the results of operations and cash flows of Seller for the periods
indicated, all in accordance with GAAP applied on a consistent basis throughout
the periods involved.
Section 4.5 Books and Records. The Books and Records of Seller, including
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financial records and books of account, are correct, complete and current in all
material respects and have been maintained in accordance with sound business
practices. Such Books and Records accurately, completely and fairly reflect the
income, expenses, assets and liabilities of Seller, and Seller maintains
internal accounting controls which provide reasonable assurance that: (a)
transactions are recorded as necessary to permit preparation of reliable
financial statements and to maintain accountability for earnings and assets; and
(b) the recorded accountability of all assets is compared with existing assets
at reasonable intervals.
Section 4.6 Absence of Undisclosed Liabilities. Seller has no knowledge of
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any debts, claims, commitments, liabilities or obligations of any nature,
absolute, accrued, contingent or otherwise and whether due or to become due,
asserted or unasserted, arising out of or relating to the Business, except (a)
as and to the extent reflected as a liability in the most recent Financial
Statements filed with the SEC, and (b) liabilities and obligations that were
incurred thereafter, in the ordinary course of business of the Business
(consistent in amount and kind with past practice) and which would not have a
Material Adverse Effect.
Section 4.7 Absence of Changes. Except in the ordinary course of Seller's
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business or in connection with the transactions contemplated by this Agreement,
since April 30, 2001, Seller has not in connection with or relating to the
Business or the Assets:
(a) suffered any Material Adverse Effect;
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(b) incurred, assumed, guaranteed or discharged any debt, claim,
commitment, obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due (including any indebtedness for borrowed money),
except current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary course of
business of the Business (consistent in amount and kind with prior practice);
(c) other than pursuant to the FNF Secured Loans and the Homemark Secured
Loans, mortgaged, pledged or subjected to any other Lien, any property, business
or assets, tangible or intangible other than Liens for Taxes not yet due and
payable and Liens for Taxes which are being contested in good faith and by
appropriate proceedings with adequate reserves therefor having been maintained
on Seller's Books and Records;
(d) sold, transferred, leased to others or otherwise disposed of any of the
Assets, or canceled or compromised any debt, claim, commitment, liability or
obligation, or waived or released any right of substantial value;
(e) received any notice of termination of any Contract;
(f) suffered any damage, destruction or casualty loss (whether or not
covered by insurance), in any case or in the aggregate, in excess of $25,000;
(g) transferred or granted any rights under, or entered into any settlement
regarding the breach, misappropriation, infringement or violation of, any
Intellectual Property, or modified any existing rights with respect thereto;
(h) made any change in the rate of compensation, commission, bonus or other
direct or indirect remuneration payable, or paid or agreed or orally promised to
pay, conditionally or otherwise, any bonus, incentive, retention or other
compensation, retirement, welfare, fringe or severance benefit or vacation pay,
to or in respect of any employee, distributor or agent of the Business, in each
case other than increases in the ordinary course of business of the Business
(consistent in amount and kind with past practice);
(i) made any change in the accounting, auditing or tax methods, practices
or principles of the Business;
(j) encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts, or had any
material change in its relations with its employees, agents, customers or
suppliers;
(k) except with respect to the payment of fees of lawyers or accountants,
entered into any transaction, contract, arrangement, order, license, lease,
permit, instrument, agreement or commitment other than in the ordinary course of
business of the Business (consistent in amount and kind with past practice), or
paid or agreed to pay any brokerage or finder's fee;
12
(l) made any discount of appraisal rates, or granted any discount of
charges for any other services rendered, to any customer on terms or in amounts
materially more favorable than had been extended to that customer in the past;
or
(m) taken any action or omitted to take any action that would result in the
occurrence of any of the foregoing.
Section 4.8 Taxes.
-----
(a) Seller has duly and timely filed all Tax Returns with respect to Taxes
required to be filed on or before the Closing Date. All such Tax Returns are
true, complete and correct. All Taxes owed by Seller (whether or not shown on
any Tax Return) have been duly and timely paid. Seller has not extended or
otherwise waived the benefit of any applicable statute of limitations or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(b) Seller has withheld all required amounts in respect of Taxes from its
employees, agents, contractors and nonresidents and, to the extent required, has
remitted such amounts to the proper agencies.
(c) Seller expects any authority to assess additional Taxes for any period
for which Tax Returns have been filed. There is no dispute or claim concerning
any Tax liability of Seller either (i) claimed by any Governmental Authority in
writing, or (ii) as to which Seller has knowledge based upon personal contact
with any agent of such Governmental Authority. All federal, state, local and
foreign income Tax Returns filed with respect to Seller for taxable periods
since January 1, 1994, have been audited. Seller has delivered to Buyer correct
and complete copies of all Tax Returns, examination reports, and statements of
deficiencies filed by, assessed against or agreed to by Seller since January 1,
1997.
Section 4.9 Litigation.
----------
(a) There is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation, civil,
criminal, regulatory or otherwise, in law or in equity, pending or, to the
knowledge of Seller, threatened, by or against or relating to Seller in
connection with the Assets or the Business.
(b) There are no judgments unsatisfied against Seller or consent decrees or
injunctions to which Seller or the Assets are subject.
(c) There is no action, claim, suit or proceeding pending, or to Seller's
knowledge threatened, by or against or affecting Seller in connection with or
relating to the transactions contemplated by this Agreement or of any action
taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby.
Section 4.10 Compliance with Laws; Governmental Approvals and Consents.
---------------------------------------------------------
(a) Seller has complied in all material respects with all Laws applicable
to the Business or the Assets.
13
(b) All Governmental Approvals and other Consents material to the conduct
of the Business as conducted by Seller prior to the Closing Date are in full
force and effect, and Seller is in compliance in all material respects with each
of such Governmental Approvals and Consents held by it with respect to the
Assets and the Business.
Section 4.11 Assets.
------
(a) Seller does not own any real property. All leases or other occupancy
agreements pursuant to which Seller occupies or uses any real property or
buildings or other structures to conduct the Business (i) are in full force and
effect and constitute legal, valid and binding obligations of Seller and, to the
knowledge of Seller, the other parties thereto, enforceable according to their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting generally
the enforcement of creditors' rights and by general principles of equity, (ii)
Seller is not in default under any of such leases and other occupancy
agreements, (iii) to the knowledge of Seller, no other party to any of such
leases and other occupancy agreements is in default thereunder, and (iv) there
exist no conditions which, with notice or lapse of time, or both, would
constitute a default by Seller (or, to the knowledge of Seller, a default by any
other party thereto) under any of such leases and other occupancy agreements.
(b) No personal property used by Seller in the Business is held by Seller
under any lease, license, security agreement, conditional sales contract, or
other title retention or security arrangement. No personal property used by
Seller in the Business is not in the possession and under the control of Seller.
The Assets include all inventory, machinery, equipment, furniture, leasehold and
other improvements, fixtures, any related capitalized items and other tangible
property (i) reasonably required for the conduct of the Business as now being
conducted, or (ii) material to the financial condition or results of operations
of the Business. The Assets are in good operating condition and repair (normal
wear and tear excepted), and are suitable for their current use by Seller. The
Assets do not include stock of or other equity interests in any Person.
(c) Seller has good and valid title to the Assets (other than leased
Assets), free and clear of restrictions on, or conditions to, transfer or
assignment, and free and clear of all Liens, except for Liens for (i) Taxes not
yet due and payable and Liens for Taxes which are being contested in good faith
and by appropriate proceedings with adequate reserves therefor ("Permitted
Liens"), and (ii) Liens arising under the FNF Secured Loans and the Homemark
Secured Loans, which Liens shall be released at or prior to the Closing Date.
Section 4.12 Contracts.
---------
(a) Seller has furnished Buyer with access to all material agreements,
contracts, commitments, orders, licenses, leases and other instruments and
arrangements, whether written or oral (the "Contracts") to which Seller is a
party or by which it or any of its assets is bound which primarily relate to the
Business, the Assets or the Governmental Approvals included in the Assets,
together with all amendments thereto.
(b) There does not exist under any Contract any event of default or event
or condition that, after notice or lapse of time or both, could constitute a
violation, breach or
14
event of default thereunder on the part of Seller or, to the knowledge of
Seller, any other party thereto except for such events or conditions that,
individually and in the aggregate, (i) have not had or resulted in, and could
not reasonably be expected to result in the future in, a Material Adverse
Effect, and (ii) have not materially impaired the ability of Seller to perform
its obligations under this Agreement. Each Contract is a legal, valid, binding
and enforceable obligation of Seller and, to the knowledge of Seller, the other
parties thereto.
Section 4.13 Territorial Restrictions. Seller is not restricted
------------------------
by any agreement or understanding with any other Person from carrying on the
Business anywhere in the world.
Section 4.14 Receivables. Seller's accounts receivable which have
-----------
arisen in connection with the Business have arisen only from bona fide
transactions in the ordinary course of business.
Section 4.15 Intellectual Property.
---------------------
(a) All granted and issued patents, copyright registrations, and
registered trademarks and service marks and all copyrights held by Seller are
valid, enforceable and subsisting. Seller has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Intellectual Property.
(b) None of the Intellectual Property is subject to any Lien in
favor of any third party other than Liens resulting from the FNF Secured Loans
and the Homemark Secured Loans (which Liens shall be released at or prior to
Closing) and Seller owns all right, title and interest therein and thereto and,
to Seller's knowledge, no other Person has any right, title or interest in or to
any of the Intellectual Property. None of Seller's rights in or to any of the
Intellectual Property shall be adversely affected by its execution or delivery
of this Agreement or by the performance of its obligations hereunder. No claims
with respect to any Intellectual Property have been asserted or, to Seller's
knowledge, threatened by any Person against Seller. No use of any of the
Intellectual Property by any Person (including Seller) constitutes or has
constituted an unauthorized use, infringement, misappropriation or other
violation of the Intellectual Property of any other Person and no valid grounds
exist for any claims against Seller or any such Person with respect to any
Intellectual Property. Without limiting the generality of the foregoing, no
Person ever employed or otherwise engaged by Seller has asserted or, to Seller's
knowledge, threatened any claim against Seller relating to any Intellectual
Property. To Seller's knowledge, there has not been, nor is there presently, any
unauthorized use, infringement, misappropriation or violation of any of the
Intellectual Property by any Person. Seller has the full and exclusive right to
possess, use, copy, distribute, display, transfer and license all of the
Intellectual Property.
(c) No Intellectual Property is subject to any outstanding order,
award, decision, injunction, judgment, decree, stipulation or agreement in any
manner restricting the transfer, use, enforcement or licensing thereof by
Seller. Seller has not entered into any agreement to indemnify any other Person
against any charge of infringement of any Intellectual Property. Seller has not
entered into any agreement granting any third party
15
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any of the Intellectual Property.
(d) Seller has paid all material fees, annuities and all other
payments which have heretofore become due to any Governmental Authority with
respect to the Intellectual Property and has taken all steps reasonable and
necessary to prosecute and maintain the same.
(e) Seller has not transferred its title in or to any
Intellectual Property. Seller has not permitted any Person to utilize any
Intellectual Property.
(f) Seller's use of the Intellectual Property is pursuant to
valid and binding licenses and the execution and delivery by Seller of this
Agreement and the consummation of the transactions contemplated hereby shall not
alter or impair any such licenses. No Consent shall be required in connection
with the transfer of such licenses to Buyer pursuant to this Agreement.
Section 4.16 Insurance. All policies, and premiums on account
---------
thereof, of fire and casualty, liability (including errors and omissions),
theft, fidelity, and other forms of insurance covering the Business is in
amounts and provides coverage against such losses and risks as are generally
maintained for comparable businesses and properties. Such policies of insurance
are deemed to be adequate by Seller and will be outstanding and fully in force
through the Closing Date. There is no claim by Seller pending under any of such
policies as to which coverage has been questioned, denied or disputed by the
underwriters thereof, and Seller has not, within the last three years, been
refused any insurance or had its coverage limited.
Section 4.17 Environmental Matters.
---------------------
(a) Seller is and has been in compliance with all applicable
Environmental Laws pertaining to any of the properties and assets of the
Business and the use by Seller thereof. Seller has obtained all permits,
licenses and other authorizations that are required under Environmental Laws
necessary to operate the Business. Seller has not received notice of any
violation of any applicable Environmental Law relating to any of the Assets or
to any part of the premises utilized by the Business and, to the knowledge of
Seller, no such accusation is threatened.
(b) Seller has not caused or taken any action that resulted in,
and Seller is not subject to, any material liability or obligation relating to
(i) the environmental conditions on, under, or about any part of the premises
utilized by the Business or other properties or assets owned, leased, operated
or used by Seller in the Business, including the air, soil and groundwater
conditions at such properties, or (ii) the use, management, handling, transport,
treatment, generation, storage, disposal or Release of any Hazardous Substances
by Seller.
(c) No Hazardous Substances have been treated, stored or disposed
of by Seller (or any other Person) at, on, or under any part of the premises
utilized by the Business, which are required by applicable Environmental Laws
currently in effect to be remediated
16
by Seller, where the cost of such remediation, individually or in the aggregate,
would have a Material Adverse Effect.
(d) Seller has not received notice or other communication
concerning any alleged liability for Environmental Liabilities and Costs in
connection with any part of the premises utilized by the Business and, to
Seller's knowledge, there exists no writ, injunction, decree, order, judgment,
lawsuit, claim, proceeding, citation, directive, or summons, pending or
threatened, relating to any environmental matters with respect to any such
premises.
Section 4.18 Employee Matters.
----------------
(a) Except as required by this Agreement, Seller does not have
any employment contracts with any employees employed in the Business, and there
is no pending termination of employment of any employee employed in the Business
which would have a Material Adverse Effect. There are no employment agreements,
pending negotiations, arrangements or understandings with employees employed in
the Business having a fixed term.
(b) There are no labor disputes pending or, to the knowledge of
Seller, threatened against Seller in respect of the Business. Seller has not
experienced any labor dispute, strike, picketing, handbilling, work slowdown,
work stoppage or other concerted labor difficulty in the operation of the
Business.
(c) No charge or complaint of employment discrimination against
Seller is pending or, to the knowledge of Seller, threatened before any federal,
provincial or local agency, court or tribunal relating to the operation of the
Business.
(d) No charge or complaint against Seller is pending or, to the
knowledge of Seller, threatened for payment of wages or other benefits under any
federal, provincial or local employment standards law relating to the operation
of the Business.
(e) No charge or complaint against Seller is pending or, to the
knowledge of Seller, threatened before the Workers' Compensation Board or any
similar provincial or local agency relating to the operation of the Business.
(f) No complaint or action against Seller by any current or
former employee of Seller, including, but not limited to, a complaint or action
alleging breach of an employment contract, wrongful discharge or breach of a
duty of good faith and fair dealing in the employment relationship, is pending
or, to the knowledge of Seller, threatened relating to the operation of the
Business.
(g) There are no pending or, to the knowledge of Seller,
threatened claims against Seller for workers' compensation, unemployment
insurance or disability benefits under any federal, provincial or local law
relating to the operation of the Business.
(h) All vacation, sick pay and bonuses earned by employees
employed in the business through the Closing shall be fully paid and, except to
the extent otherwise provided for herein, on or before the Closing Date, all
benefits under any and all Employee
17
Benefit Plans earned by employees employed in the Business through the Closing
shall be fully paid by Seller to the appropriate Person, in compliance with
applicable Law.
Section 4.19 Brokers, Finders, etc. All negotiations relating to
---------------------
this Agreement, and the transactions contemplated hereby, have been carried on
without the participation of any Person acting on behalf of Seller or its
Affiliates in such manner as to give rise to any valid claim against Buyer or
its Affiliates for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to Seller or its Affiliates or any
other Person upon consummation of the transactions contemplated hereby.
Section 4.20 Suppliers and Customers. During the period from
-----------------------
January 1, 2001 through the Closing Date, none of the 10 largest customers of
the Business, in each case for the period from January 1, 2001 through the
Closing Date, has canceled or substantially modified its agreement or commitment
with Seller or the Business to supply services (or threatened in writing to do
so). The relationship of Seller with each of its customers is a good commercial
working relationship. Seller has no knowledge that any customer of the Business
intends to cancel or otherwise substantially modify its relationship with Seller
or the Business, or substantially modify its purchase of the services and
products of the Business, either as a result of the transactions contemplated
hereby or otherwise.
Section 4.21 No Retention Agreements, etc. There are no retention
----------------------------
agreements, severance agreements, change of control agreements and similar
arrangements to which Seller, on the one hand, and any employee, consultant or
other Person, on the other hand, are a party.
Section 4.22 Bulk Sales Laws. The transactions contemplated by
---------------
this Agreement, including, without limitation, the transfer of the Assets from
Seller to Buyer, do not require any action by Buyer or Seller under any Law
related to the transfer of assets, including, without limitation, any state bulk
sales or similar Laws.
Section 4.23 Representations Complete. None of the
------------------------
representations or warranties made by Seller in this Agreement (including the
Exhibits and the Schedules hereto), nor any statement made in any Schedule,
Exhibit, certificate, report, instrument, list or other document furnished or to
be furnished by or on behalf of Seller pursuant hereto or thereto or in
connection with the transactions contemplated hereby, contained, contains or
will contain on the date delivered any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
made, not misleading. Seller has disclosed to Buyer all facts of which they have
knowledge that would reasonably be expected to have a Material Adverse Effect.
18
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date of this
Agreement and as of the Closing Date, as follows:
Section 5.1 Corporate Status. Buyer is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
Section 5.2 Authorization, etc. Buyer has the corporate power and
------------------
authority to execute and deliver this Agreement, to perform fully its
obligations hereunder, and to consummate the transactions contemplated hereby.
The execution and delivery by Buyer of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly authorized by all requisite
corporate action. Buyer has duly executed and delivered this Agreement. This
Agreement is a legal, valid and binding obligation of Buyer, enforceable against
it in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights in general and as the same may be limited by general
principles of equity.
Section 5.3 No Conflicts, etc. The execution, delivery and
-----------------
performance by Buyer of this Agreement, and the consummation of the transactions
contemplated hereby, do not and will not conflict with or result in a violation
of or under (with or without the giving of notice or the lapse of time or both)
(a) the articles or certificate of incorporation or by-laws of Buyer, or (b) any
contract, agreement or other instrument applicable to Buyer, or any of its
properties or assets, except, in the case of clause (b) for violations and
defaults that, individually and in the aggregate, have not materially impaired
and shall not materially impair the ability of Buyer to perform its obligations
under this Agreement. No Governmental Approval or other Consent is required to
be obtained or made by Buyer in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Section 5.4 Brokers, Finders, etc. All negotiations relating to
---------------------
this Agreement and the transactions contemplated hereby have been carried on
without the participation of any Person acting on behalf of Buyer in such manner
as to give rise to any valid claim against Seller for any brokerage or finder's
commission, fee or similar compensation.
ARTICLE 6
COVENANTS
Section 6.1 Covenants of Seller.
-------------------
6.1.1 Except as and to the extent required by applicable Law (in
which case the nature of the announcement shall be described to Buyer, and Buyer
shall be allowed reasonable time to comment prior to dissemination to the
public), prior to the Closing, Seller shall not make any public comment,
statement or communication nor shall Seller make any announcement to any of its
customers, vendors or underwriters, with respect to,
19
or otherwise disclose or permit the disclosure of the existence or terms of the
discussions regarding, this Agreement or the transactions contemplated hereby or
thereby without Buyer's prior written consent.
6.1.2 From the date hereof through the Closing Date, except as
otherwise expressly permitted by this Agreement or as otherwise consented to by
Buyer in writing, Seller shall carry on Seller's businesses (including the
Business) only in the ordinary course of business consistent with past practice,
and in substantially the same manner as heretofore conducted, and shall take no
action which would adversely affect its ability to consummate the transactions
contemplated hereunder. Without limiting the generality of the foregoing, except
as otherwise expressly provided in this Agreement, prior to the Closing, Seller
will:
(a) preserve intact its present corporate existence and business
organizations, pay and discharge all debts and liabilities as they become due,
and operate solely in the ordinary course of business in a manner consistent
with the provisions of this Agreement and in compliance in all material respects
with all applicable Laws, permits and licenses, commitments and Contracts of
Seller;
(b) use best efforts to maintain its relationships and goodwill with
customers, clients, suppliers, vendors, underwriters, employees, agents and
others with whom it has business dealings;
(c) maintain its facilities, properties and assets in the same state of
repair, order and condition as they were on the date hereof, normal wear and
tear excepted;
(d) keep proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the Assets and Business
in accordance with GAAP consistently applied, and maintain its books, accounts
and records in the ordinary course of business consistent with past practice;
(e) maintain in full force and effect all existing governmental licenses,
franchises and permits and insurance policies and binders;
(f) promptly advise Buyer in writing of the threat or commencement against
Seller or its Affiliates of any suit, claim or action of which it has knowledge
and which could have a Material Adverse Effect on Seller, the Business or the
Assets; and
(g) promptly advise Buyer in writing of any event or the existence of any
fact which makes untrue, or will make untrue as of the Closing, any
representation or warranty of Seller set forth in this Agreement; provided,
--------
however, that no disclosure by Seller pursuant to this Section 6.1.2(g) shall be
-------
deemed to amend or supplement this Agreement, to limit or otherwise affect the
remedies available to Buyer hereunder, or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant by Seller.
6.1.3 Without limiting the provisions of Section 6.1.2, from the date
hereof through the Closing Date, except as otherwise expressly permitted by this
Agreement or as otherwise consented to by Buyer in writing, Seller shall not:
20
(a) Except in accordance with the terms and conditions of the FNF Secured
Loans, amend its Articles of Incorporation or Bylaws (or similar organizational
documents);
(b) issue, sell, deliver, grant, accelerate, repurchase, redeem any options
for, or otherwise agree or commit to issue, sell or deliver any equity interests
in Seller, including, without limitation, stock or any other securities;
(c) recapitalize, split, combine or reclassify any equity interests in
Seller, including, without limitation, stock or other securities; declare, set
aside, pay or make any dividend or other distribution or payment (whether in
cash, units or property or any combination thereof) in respect of, or purchase,
redeem or otherwise acquire any of its securities, or modify any of the terms of
any such securities;
(d) (A) other than debt in existence as of the date of this Agreement
(including, without limitation, the FNF Secured Loans and the Homemark Secured
Loans) or the refinancing of any such existing debt on more favorable terms to
Seller, create, incur, assume, maintain or permit to exist any long-term debt or
any short-term debt for borrowed money, provided, however, that Buyer's consent
to the creation or incurrence of any new debt between the date of this Agreement
through the Closing Date shall not be unreasonably withheld; (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; or (C) make
any loans, advances or capital contributions to, or investments in, any other
Person;
(e) make any capital expenditure or capital expenditure commitment in
excess of $50,000 whether individually or in the aggregate;
(f) grant (or commit to grant) any increase in the compensation (including
incentive or bonus compensation) of any of its employees or institute, adopt or
amend (or commit to institute, adopt or amend) any compensation or benefit plan,
policy, program or arrangement or collective bargaining agreement applicable to
any of its employees;
(g) amend, terminate or enter into any employment, consulting, severance,
change in control or similar agreement or arrangement (including any commitment
to pay retirement or other benefits) to or with any of its officers, directors
or employees, or any collective bargaining agreement or commitment;
(h) (A) enter into or terminate any lease of real estate; (B) create any
Lien on any assets or properties of Seller (including the Assets); (C) make any
modifications of or changes in or terminate any existing Contract other than as
may be required to consummate the transactions contemplated hereby; or (D) enter
into any material Contract;
(i) make, give or grant any bid or proposal, (A) involving an amount in
excess of $10,000 (or amend, supplement or terminate any existing bid or
proposal); or (B) involving a loss to Seller;
(j) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any Contract with respect to, any (A) plan
of liquidation or dissolution, (B) merger or consolidation, (C) change in its
capitalization; (D)
21
sale, assignment, license, disposition of or transfer any Asset, other than
sales of Seller's products and services to Buyer or its Subsidiaries; or (E)
incurrence of any liabilities or obligations (including liabilities with respect
to indebtedness, capital leases or guarantees thereof);
(k) change any accounting methods, principles or practices followed by
Seller, or any of the assumptions underlying, or methods of calculating, any bad
debt, contingency or other reserve;
(l) change or revoke any election with respect to Taxes, change any Tax
procedure or practice, or enter into any settlement or compromise of any dispute
involving a Tax liability;
(m) commence, compromise, settle or otherwise modify any material claim,
lawsuit or judicial proceeding, or repay or prepay any liability, obligation or
indebtedness prior to its stated maturity;
(n) give or agree to give any discount of Seller's products and services,
unless such discount is for Buyer or its Subsidiaries;
(o) take any action or omit to take any action that would cause any of the
representations or warranties contained herein not to be true and correct at any
time between the date hereof and the Closing Date; or
(p) commit or agree to do any of the foregoing.
6.1.4 From the date hereof through the Closing, Seller shall: (i)
provide to Buyer complete access at all reasonable times to the Contracts,
agreements between Seller and any Affiliate, Seller's Books and Records, offices
and other facilities and properties (including physical inspections of any of
the current premises); (ii) furnish Buyer with all financial, operating and
other documents, records, data, work papers and other information regarding the
Business, the Assets, Contracts, liabilities, personnel and properties of Seller
as Buyer may from time to time reasonably request; and (iii) take all action
necessary to enable Buyer to make such inspections, reviews and audits thereof
as Buyer may reasonably request, and discuss the same with representatives of
Seller.
6.1.5 From the date hereof to the Closing Date, as promptly as
practicable, Seller will (i) use commercially reasonable efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby on or before the Closing Date; (ii) file or
supply, or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Seller pursuant to applicable
Law in connection with this Agreement, the sale and transfer of the Assets
pursuant hereto and the consummation of the other transactions contemplated
hereby; (iii) use all reasonable efforts to obtain, or cause to be obtained, all
Consents (including any required under applicable Law or any Contract) necessary
to be obtained by Seller in order to consummate the transactions contemplated
pursuant to this Agreement; (iv) coordinate and cooperate with Buyer in
exchanging such information and supplying such assistance as may be reasonably
requested by Buyer in connection with any filings and other actions contemplated
hereby.
22
6.1.6 Prior to the Closing Date, Seller, with the reasonable
cooperation of Buyer, shall cause the transfer of, and the making of all
applicable notifications with respect to, any Consents from any third party
under any Contract or from any Governmental Authority, including any
environmental permits, authorizations and similar instruments, that are required
to be transferred or made in connection with the transactions contemplated
hereby.
6.1.7 Following the Closing, Seller shall, from time to time, execute
and deliver such additional instruments, documents, conveyances or assurances
and take such other actions as shall be necessary, or otherwise reasonably
requested by Buyer, to confirm and assure the rights and obligations provided
for in this Agreement and render effective the consummation of the transactions
contemplated hereby or thereby.
6.1.8 (i) In connection with the purchase by Buyer of the Assets and
the other transactions contemplated hereby, Seller will not, and will cause its
Affiliates not to, for a period of 5 years following the Closing (provided such
5 year period shall be extended for any period of xxxx Xxxxxx or its Affiliates
is in breach of this subsection (h)), anywhere in the world directly or
indirectly, design, create, market or sell products or provide services which
are competitive to the Business at the time of the Closing ("Competitive
Products and Services"). Without limiting the generality of the foregoing,
neither Seller nor any of its Affiliates shall, directly or indirectly, be a
director, officer or employee of, or consultant to, or own any interest in any
Person that designs, creates, markets or sells Competitive Products or Services.
The provisions of this Section 6.1.8 shall not be construed to prohibit the
rendering of services by Seller or any of its Affiliates to Buyer or its
Subsidiaries, or the ownership by Seller or any of its respective Affiliates of
an aggregate interest of less than 5% of any publicly traded company with stock
listed on a national exchange or Nasdaq that designs, creates, manufactures,
sells or provides any Competitive Products and Services. Notwithstanding
anything to the contrary above, Buyer acknowledges that Seller's continued
development, marketing and sale of its IDXnet broker reciprocity product
offering, as described by Seller to Buyer as of the date of this Agreement, does
not constitute a Competitive Product and Service. In addition, Buyer
acknowledges that for purposes of this Section 6.1.8(i) only, Xxxxxxx
Interactive, Inc. shall not be deemed an Affiliate of Seller and is not subject
to the provisions of this Section 6.1.8(i).
(ii) In connection with the transactions contemplated hereby, Seller
will not, and will cause its Affiliates not to, for a period of 5 years
following the Closing, directly or indirectly induce or solicit, or aid or
assist any Person to induce or solicit, any employees or officers of Buyer or
its Subsidiaries, to terminate, curtail or otherwise limit his or her employment
by or business relationship with Buyer or its Subsidiaries.
(iii) The parties hereto agree that the provisions of this Section
6.1.8 are reasonable. If a court determines, however, that any provision of this
Section 6.1.8 is unreasonable, either in period of time, geographical area or
otherwise, then the parties hereto agree that the provisions of this Section
6.1.8 should be interpreted and enforced to the maximum extent which such court
deems reasonable. The provisions of this Section 6.1.8 shall inure to the
benefit of Buyer, its Affiliates, and their respective successors and assigns.
23
6.1.9 Prior to the Closing, all information received from Buyer prior
to the Closing shall be deemed received pursuant to the Confidentiality
Agreement, and Seller shall comply with the confidentiality provisions of the
Confidentiality Agreement with respect to such information. The confidentiality
provisions of the Confidentiality Agreement are hereby incorporated herein by
reference with the same effect as if fully set forth herein.
6.1.10 From and after the Closing, Seller will, and will cause its
respective Affiliates to, hold in strict confidence, and not use to the
detriment of Buyer or its Subsidiaries, any information with respect to Buyer,
its Subsidiaries, or their respective business assets or properties, including,
without limitation, the Business and the Assets. Without limiting the generality
of the foregoing, Seller agrees, covenants and acknowledges that, from and after
the Closing Date, it will not, and will cause its respective Affiliates not to,
directly or indirectly, disclose, give, sell, use, or otherwise divulge any
confidential or secret information (including but not limited to any technology,
process, trade secrets, know-how, other intellectual property rights,
strategies, financial statements or other financial information not otherwise
publicly available, forecasts, operations, business plans, prices, discounts,
products, product specifications, designs, plans, data or ideas) primarily used
in or primarily related to Buyer, its Subsidiaries, or their respective
business, assets or properties, including, without limitation, the Business and
the Assets. Notwithstanding the foregoing, Seller may disclose such information
(i) if compelled to disclose the same by judicial or administrative process or
by other requirements of applicable Law (but subject to the following provisions
of this Section 6.1.10); (ii) if the same hereafter is in the public domain
through no fault of Seller; or (iii) if the same is later acquired by Seller
from another source and such source is not under an obligation to another
Person, Buyer or its Subsidiaries to keep such information confidential. If
Seller or any of its Affiliates (the "Disclosing Party") is requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any such information, the Disclosing Party shall
provide Buyer with prompt notice of any such request or requirement so that
Buyer may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 6.1.10. If, in the absence of a
protective order or other remedy or the receipt of a waiver by Buyer, the
Disclosing Party nonetheless, based on the written advice of counsel, is
required to disclose such information to any tribunal or else stand liable for
contempt or suffer other censure or penalty, the Disclosing Party, without
liability hereunder, may disclose that portion of such information which such
counsel advises the Disclosing Party it is legally required to disclose.
6.1.11 From the date hereof through the Closing, Seller and its
Affiliates shall (and shall cause their respective Affiliates to) immediately
suspend any existing negotiations or discussions relating to any direct or
indirect sale of substantially all of its assets or any sale of all or any
portion of the Assets (collectively, a "Transaction"), and Seller shall not, and
shall cause their respective Affiliates not to, directly or indirectly, (i)
encourage, solicit, participate in or continue or initiate discussions or
negotiations with, or provide any information to, otherwise cooperate with, or
take any other action to facilitate knowingly any inquiries or the making of any
proposal or offer, to any Person, which constitutes, or may reasonably be
expected to lead to, any Transaction, or (ii) negotiate or discuss with any
third party concerning any proposal or offer for a Transaction. Seller shall
24
promptly notify Buyer of any such proposal initiated by any third party. Subject
to the other terms and conditions of this Agreement, nothing contained in this
Section 6.1.11 shall prohibit Seller and its Affiliates from continuing or
entering into negotiations or discussions related to any transaction that does
not constitute a Transaction, including, without limitation, any merger, joint
venture, sale offer or tender offer for stock or other securities of, other
transfer of actual or beneficial ownership of or other similar transaction
involving Seller, its operations or less than substantially all its assets other
than the Assets; provided, that any such negotiations or discussions, or the
consummation of any such transaction, shall be expressly subject to this
Agreement and shall not in any way impair Buyer's rights under this Agreement.
6.1.12 Seller shall be responsible for filing any and all Tax Returns
and shall be responsible for any and all tax liability related to the Business
and the Assets for all periods prior to the Closing Date, including, without
limitation, the period commencing January 1, 2001 and ending on the Closing
Date.
Section 6.2 Covenants of Buyer.
------------------
6.2.1 Except as and to the extent required by applicable Law (in
which case the nature of the announcement shall be described to Seller, and
Seller shall be allowed reasonable time to comment prior to dissemination),
prior to the Closing, Buyer shall not make any public comment, statement or
communication, nor shall Buyer make any announcement to any of its customers,
vendors or underwriters, with respect to, or otherwise disclose or permit the
disclosure of the existence or terms of the discussions regarding, this
Agreement or the transactions contemplated hereby or thereby without the prior
written consent of Seller.
6.2.2 From the date hereof to the Closing Date, as promptly as
practicable, Buyer will: (i) file or supply, or cause to be filed or supplied,
all applications, notifications and information required to be filed or supplied
by Buyer pursuant to applicable Law in connection with this Agreement, the
purchase and transfer of the Assets pursuant hereto and the consummation of the
other transactions contemplated hereby; and (ii) coordinate and cooperate with
Seller in exchanging such information and supplying such reasonable assistance
as may be reasonably requested by Seller in connection with any filings and
other actions contemplated by Section 6.1.5. Notwithstanding the foregoing,
Buyer shall not be obligated to obtain or make any authorization, consent,
filing or approval if, in Buyer's reasonable judgment, doing so could have a
Material Adverse Effect on Buyer.
6.2.3 Following the Closing, Buyer shall, from time to time, execute
and deliver such additional instruments, documents, conveyances or assurances
and take such other actions as shall be necessary, or otherwise reasonably
requested by Seller, to confirm and assure the rights and obligations provided
for in this Agreement and render effective the consummation of the transactions
contemplated hereby.
6.2.4 Prior to the Closing, all information received from Seller
prior to the Closing shall be deemed received pursuant to the confidentiality
provisions of the Confidentiality Agreement, and Buyer shall comply with the
confidentiality provisions of the Confidentiality Agreement with respect to such
information.
25
6.2.5 On or prior to the Closing Date, Buyer shall offer employment
to certain employees of Seller selected by Buyer in its sole discretion on such
terms and conditions as determined by Buyer in its sole discretion. Those
employees accepting such offer from Buyer are referred to herein as "Transferred
Employees." As of the Closing Date, and without any interruption of coverage,
Buyer shall provide to each Transferred Employee (i) participation in Employee
Benefit Plans of Buyer consistent with that provided similarly situated
employees of Buyer, and (ii) credit for service with Seller, determined on the
Closing Date, for purposes of such participation. Buyer shall waive all
pre-existing condition exclusions and actively-at-work requirements and provide
that any expenses incurred on or before the Closing Date by a Transferred
Employee or a Transferred Employee's covered dependent shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions.
Section 6.3 Joint Covenant. Following the execution of this Agreement and
--------------
continuing following the Closing, Buyer and Seller shall, in good faith,
negotiate a Software Development, License and Marketing Agreement, or other
similar agreement or agreements, pursuant to which (i) Buyer, at its option, may
retain Seller to perform certain software development and/or support services
for a mutually agreed upon fee, (ii) Seller shall license from Buyer the Shared
Software necessary for Seller to operate the IDXnet broker reciprocity product
offering for a mutually agreed upon fee, (iii) Seller and Buyer shall establish
a cross-marketing relationship for certain mutually agreed upon products,
including Seller's IDXnet broker reciprocity product offering, and related
commissions to be mutually agreed upon by the parties; and (iv) such other terms
and conditions as the parties may mutually agree. Buyer and Seller expressly
understand and agree that the execution of the above described agreement or
agreements shall not be a condition to close the transactions contemplated by
this Agreement.
Section 6.4 Management Agreement. Promptly following the execution of this
--------------------
Agreement, but in no event later than three (3) business days from such date,
Buyer and Seller shall enter into a Management Agreement pursuant to which Buyer
shall assume full management responsibilities of the Business, including control
over the day-to-day operations, for the period commencing on the date of this
Agreement and ending on the earlier of (i) the Closing, or (ii) the termination
of this Agreement (the "Management Term"). The Management Agreement shall
contain customary terms and conditions for a business relationship of this type,
including (i) the right of Buyer to all revenues generated from the Business and
the obligation of Buyer for all expenses directly related to the Business, and
(ii) the ability of Buyer to reduce such expenses in a commercially reasonable
manner.
ARTICLE 7
CONDITIONS PRECEDENT
Section 7.1 Conditions to Obligations of Each Party. The obligations of the
---------------------------------------
parties hereto to consummate the transactions contemplated hereby at the Closing
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
7.1.1 Consummation of the transactions contemplated hereby shall not
have been restrained, enjoined or otherwise prohibited by any Law, judicial
order or arbitral
26
decision. No governmental authority or agency shall have determined that any Law
makes illegal the consummation of the transactions contemplated hereby, and no
proceeding with respect to the application of any such Law to such effect shall
be pending or threatened.
Section 7.2 Conditions to Obligations of Buyer. The obligations of Buyer to
----------------------------------
consummate the purchase of the Assets and the other transactions contemplated
hereby at the Closing shall be subject to the fulfillment (or waiver by Buyer)
on or prior to the Closing Date, of each of the following additional conditions:
7.2.1 Each of the representations and warranties of Seller contained
in this Agreement or any other loan or other agreement to which Buyer and Seller
are a party that is qualified as to materiality shall be true and correct and
each such representation and warranty that is not so qualified shall be true and
correct in all material respects, in each case on the date hereof and at and as
of the Closing Date as though made on and as of the Closing Date. Seller shall
have duly performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement and any other loan or other
agreement to which Buyer and Seller are a party to be performed or complied with
by it prior to or on the Closing Date. 7.2.2 Since the date hereof, there shall
not have occurred any (i) Material Adverse Effect (including any Material
Adverse Effect due to any pending or threatened litigation) on the Business or
the Assets; or (ii) material change in the Business, the Assets, any of Seller's
Contracts or Commitments (other than its actual completion or progress toward
the same), or Seller's financial condition, prospects or operations.
7.2.3 Seller shall have delivered to Buyer a certificate, dated the
Closing Date and signed by a duly authorized officer, to the effect of Section
7.2.1 and Section 7.2.2.
7.2.4 Buyer shall have received from Seller a certificate, dated the
Closing Date and signed by the secretary or equivalent officer of Seller,
certifying to each of the following items of Seller, which shall be attached
thereto: (i) copies of its Articles of Incorporation, and all amendments thereof
to date, certified as of a recent date by the appropriate department or agency
of the State of Nevada; (ii) copies of its Bylaws, and all amendments thereof to
date; (iii) specimen signatures of its incumbent officers; (iv) certificates of
good standing (or local law equivalent) of a recent date, certified by the
Secretary of State or other appropriate official of each other state in which it
is qualified to do business; and (vi) records of all action taken by Seller
which are required by applicable Law approving this Agreement and the
transactions contemplated herein.
7.2.5 Seller shall have filed or supplied, or shall have caused to be
filed or supplied, all applications, notifications and information required to
be filed or supplied by Seller pursuant to applicable Law in connection with
this Agreement, the sale and transfer of the Assets pursuant hereto and the
consummation of the other transactions contemplated hereby. Seller shall have
obtained and shall have delivered to Buyer copies of all governmental and
non-governmental Consents required to be obtained by Seller in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. No Consent so obtained shall: (i) have been
conditioned upon the modification, cancellation or termination of any Contract,
right, license or permit
27
of Seller; (ii) impose on the Business or the Assets after the Closing any
condition, provision or requirement not presently imposed upon thereon, or any
condition that would be more restrictive after the Closing on the Business or
the Assets than the conditions presently imposed thereon; (iii) necessitate the
payment of premium or penalty by, or loss of benefit to, Buyer as successor
owner of the Business and the Assets or necessitate an increase in tangible net
worth of the Assets; or (iv) impose a requirement on Buyer or its Subsidiaries
that, in Buyer's reasonable judgment, shall have a Material Adverse Effect on
Buyer or its Subsidiaries.
7.2.6 All corporate and other proceedings of Seller in connection
with this Agreement and the transactions contemplated hereby and thereby, and
all documents and instruments incident thereto, shall be reasonably satisfactory
in form and substance to Buyer, and Buyer shall have received from Seller all
such documents and instruments, or copies thereof, certified if requested, as
may be reasonably requested.
7.2.7 Seller shall have delivered to Buyer at the Closing all
documents, certificates and agreements necessary to transfer to Buyer title to
the Assets, free and clear of any and all Liens thereon, which documents,
certificates and agreements shall each be in form and substance reasonably
satisfactory to Buyer, including (i) a xxxx of sale, assignment and general
conveyance, dated the Closing Date, with respect to the Assets, and (ii)
assignment of all Contracts, Intellectual Property, and any other agreements and
instruments constituting Assets, dated the Closing Date, assigning all of
Seller's right, title and interest therein and thereto.
7.2.8 Seller shall have delivered to Buyer certificates of its
managers and officers, in form and substance reasonably satisfactory to Buyer,
dated the Closing Date, certifying that (i) no claims have been brought or, to
such individual's knowledge, threatened against such individual which would or
may give rise to a right to indemnification from Seller, and (ii) such
individual has no claim against Seller (other than for any accrued and unpaid
wages).
7.2.9 Buyer shall have completed to its sole satisfaction its
business, financial and legal due diligence investigation of Seller, the
Business and the Assets, and shall have found, in Buyer's sole discretion,
Seller's prospects, Business, operations, Assets, Contracts, rights and
liabilities, including its liabilities with respect to, and compliance with,
Environmental Laws and legal and regulatory requirements, satisfactory. Without
limiting the generality of the foregoing, Buyer shall have received true,
complete and correct copies of each Contract of Seller or other document of
Seller and shall have reviewed and be satisfied with the same.
7.2.10 Seller and Buyer shall entered into a Software Development
Agreement, acceptable to Buyer in its sole discretion, pursuant to which Seller
shall develop the Version 8 Software for the benefit of Buyer and in accordance
with detailed specifications related to the nature and performance of the
Version 8 Software.
7.2.11 Seller's counsel shall have delivered to Buyer a legal opinion
letter substantially in the form of Exhibit A hereto.
28
7.2.12 Seller shall have (i) paid in full all amounts due Homemark
under the Homemark Secured Loans and Homemark shall have accepted such payment
in full satisfaction of the Homemark secured Loans, (ii) caused Homemark to
release any and all Liens asserted by Homemark against the Assets, and (iii)
entered into a general release of claims with Homemark in form and substance
satisfactory to Buyer in its sole discretion.
7.2.13 Seller shall have caused FNF to release any and all Liens
asserted by FNF against the Assets.
7.2.14 Seller shall have satisfied all conditions precedent set forth
in Section 5 of the Revolving Credit Agreement between Seller and FNF of even
date herewith.
7.2.15 Seller shall have delivered to Buyer the Disclosure Schedules
within ten (10) days following the execution of this Agreement and Buyer shall
have approved, in its sole discretion. each exception to the representations and
warranties contained therein.
Section 7.3 Conditions to Obligations of the Seller and Members. The
---------------------------------------------------
obligation of Seller to consummate the transactions contemplated hereby at the
Closing shall be subject to the fulfillment (or waiver by Seller), on or prior
to the Closing Date, of the following additional conditions:
7.3.1 Each of the representations and warranties of Buyer contained
in this Agreement that is qualified as to materiality shall be true and correct
and each such representation and warranty that is not so qualified shall be true
and correct in all material respects, in each case on the date hereof and at and
as of the Closing Date as though made on and as of the Closing Date. Buyer shall
have duly performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
7.3.2 All corporate proceedings of Buyer in connection with this
Agreement and the transactions contemplated hereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received from Buyer all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing Date:
8.1.1 by the written agreement of Buyer and Seller;
8.1.2 by Buyer, by notice to Seller, if the Closing shall not have
been consummated pursuant hereto by 5:00 p.m. Pacific time on November 30, 2001;
29
8.1.3 by Buyer by notice to Seller, if any of the conditions set
forth in Section 7.1 or Section 7.2 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by 5:00 p.m. Pacific
time on November 22, 2001, unless such failure shall be due to the failure of
Buyer to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing; or
8.1.4 by Seller by notice to Buyer, if any of the conditions set
forth in Section 7.1 or Section 7.3 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by 5:00 p.m. Pacific
time on November 22, 2001, unless such failure shall be due to the failure of
Seller to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing.
Section 8.2 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to the provisions of Section 8.1, then this Agreement shall become void and have
no effect, without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, except for any
liability resulting from such party's breach of or default under this Agreement.
ARTICLE 9
INDEMNIFICATION
Section 9.1 Indemnification By Seller. Subject to the terms and conditions
-------------------------
of this Article IX, Seller covenants and agrees to defend, indemnify and hold
----------
harmless Buyer and its Affiliates (including, after the Closing, Seller) and
their respective officers, directors, employees, agents, advisers and
representatives (collectively, the "Buyer Indemnitees"), from and against, and
-----------------
pay or reimburse the Buyer Indemnitees for, any and all claims, liabilities
(including Tax liabilities), fines, costs, judgments, penalties or proceedings
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses, court
costs, consulting fees, expert witness fees and reasonable attorneys' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting any of their respective rights hereunder (collectively, "Losses"),
------
resulting from or arising out of:
9.1.1 any inaccuracy or defect in any representation or warranty of
either Seller contained in this Agreement; or
9.1.2 any breach of any covenant or agreement of Seller contained in
this Agreement; or
9.1.3 the Excluded Assets or the Excluded Liabilities; or
9.1.4 the Business, the Assets or the Assumed Liabilities prior to the
Closing; or
9.1.5 the business and/or operation (or dissolution) of Seller
following the Closing; or
30
9.1.6 the employment of the Transferred Employees by Seller, its
Subsidiaries or their respective Affiliates prior to the Closing and the
termination of the Transferred Employees by such entities pursuant to this
Agreement.
Section 9.2 Indemnification By Buyer. Subject to the terms and conditions
------------------------
of this Article IX, Buyer covenants and agrees to defend, indemnify and hold
----------
harmless Seller from and against any and all Losses resulting from or arising
out of:
9.2.1 any inaccuracy or defect in any representation or warranty of
Buyer contained in this Agreement; or
9.2.2 any breach of any covenant or agreement of Buyer contained in
this Agreement; or
9.2.3 the Assumed Liabilities following to the Closing; or
9.2.4 the employment of the Transferred Employees by Buyer or its
Subsidiaries following the Closing.
Section 9.3 Indemnification Procedures.
--------------------------
9.3.1 In the case of any claim asserted by a third party against a
party entitled to indemnification under this Agreement (each, an "Indemnified
-----------
Party"), notice shall be given by the Indemnified Party to the party required to
-----
provide indemnification (the "Indemnifying Party") as soon as practicable after
------------------
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and the Indemnified Party shall permit the Indemnifying Party (at
the expense of such Indemnifying Party) to assume the defense of any third party
claim or any litigation with a third party resulting therefrom; provided,
--------
however, that (i) the counsel for the Indemnifying Party who shall conduct the
-------
defense of such claim or litigation shall be subject to the approval of the
Indemnified Party (which approval shall not be unreasonably withheld or
delayed); (ii) the Indemnified Party may participate in such defense at such
Indemnified Party's expense (which shall not be subject to reimbursement
hereunder except as provided below); and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except and only to the
extent that such Indemnifying Party is actually and materially damaged as a
result of such failure to give notice. Except with the prior consent of the
Indemnified Party, no Indemnifying Party, in the defense of any litigation,
shall consent to entry of any judgment or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a general release from
any and all liability with respect to such litigation. If the Indemnified Party
shall in good faith determine that the conduct of the defense of any claim
subject to indemnification hereunder or any proposed settlement of any such
claim by the Indemnifying Party might be expected to affect adversely the
Indemnified Party's Tax liability or the ability of the Indemnified Party to
conduct its business, or that the Indemnified Party may have available to it one
or more defenses or counterclaims that are inconsistent with one or more of
those that may be available to the Indemnifying Party in respect of such claim
or any litigation relating
31
thereto, the Indemnified Party shall have the right at all times to take over
and assume control over the defense, settlement, negotiations or litigation
relating to any such claim at the sole cost of the Indemnifying Party; provided,
--------
however, that if the Indemnified Party does so take over and assume control, the
-------
Indemnified Party shall not settle such claim or litigation without the consent
of the Indemnifying Party, such consent not to be unreasonably withheld or
delayed. If the Indemnifying Party does not accept the defense of any matter as
above provided, the Indemnified Party shall have the full right to defend
against any such claim or demand at the sole cost of the Indemnifying Party and
shall be entitled to settle or agree to pay in full such claim or demand. In any
event, the Indemnifying Party and the Indemnified Party shall reasonably
cooperate in the defense of any third party claim or litigation subject to this
Article IX and the records of each shall be reasonably available to the other
----------
with respect to such third party defense.
9.3.2 With respect to any claim for indemnification hereunder which
does not involve a third party claim, the Indemnified Party will give the
Indemnifying Party notice of such claim. The Indemnifying Party may acknowledge
and agree by notice to the Indemnified Party to satisfy such claim within 20
days of receipt of notice of such claim from the Indemnified Party. If the
Indemnifying Party shall dispute such claim, the Indemnifying Party shall
provide notice of such dispute to the Indemnified Party within such 20-day
period, setting forth in reasonable detail the basis of such dispute. Upon
receipt of notice of any such dispute, the Indemnified Party and the
Indemnifying Party shall use reasonable efforts to resolve such dispute within
30 days of the date such notice of dispute is received. If the Indemnifying
Party shall fail to provide notice to the Indemnified Party within 20 days of
receipt of notice from the Indemnified Party that the Indemnifying Party either
acknowledges and agrees to pay such claim or disputes such claim, the
Indemnifying Party shall be deemed to have acknowledged and agreed to pay such
claim in full and to have waived any right to dispute such claim. Once (i) the
Indemnifying Party has acknowledged and agreed to pay any claim pursuant to this
Section 9.3(b); (ii) any dispute under this Section 9.3(b) has been resolved in
-------------- --------------
favor of indemnification by mutual agreement of the Indemnifying Party and the
Indemnified Party; or (iii) any dispute under this Section 9.3(b) has been
--------------
finally resolved in favor of indemnification by court order of any court having
jurisdiction over such dispute, then the Indemnifying Party shall pay the amount
of such claim to the Indemnified Party within 20 days of the date of
acknowledgement or resolution, as the case may be, to such account and in such
manner as is designated in writing by the Indemnified Party.
9.3.3 If a claim for indemnification has been made prior to the
Expiration Date, the parties' rights and obligations under this Article IX in
----------
respect of such claim shall continue even if the Expiration Date shall occur
prior to full resolution of such claim.
Section 9.4 Limitation of Liability for Losses; Expiration of
-------------------------------------------------
Representations and Warranties. Notwithstanding anything to the contrary in this
------------------------------
Agreement, except for Losses arising from fraud or willful misconduct by the
Indemnifying Party, the maximum aggregate liability (i) of Seller to indemnify
the Buyer Indemnitees for Losses under Section 9.1, or (ii) of Buyer to
indemnify Seller under Section 9.2, shall, in each case, not exceed the amount
of the Purchase Price. Except in the event of fraud or willful misconduct, in
which case all representations and warranties contained in this Agreement shall
expire upon the expiration of the relevant statute of limitations, all
representations and warranties
32
contained in this Agreement shall survive the Closing for a period of two (2)
years (the "Expiration Date").
ARTICLE 10
MISCELLANEOUS
Section 10.1 Expenses. Seller shall be responsible for and bear all
--------
expenses, costs and fees (including investment banking, attorneys' and auditors'
fees, any broker's or finder's fees, and any other expenses) incurred at any
time by Seller in connection with pursuing or consummating the transactions
contemplated hereby, including the preparation, execution and delivery of this
Agreement and compliance herewith, whether or not the transactions contemplated
hereby shall be consummated. Buyer shall bear such expenses, costs and fees
incurred by it.
Section 10.2 Severability. If any provision of this Agreement, including
------------
any phrase, sentence, clause, Section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
Section 10.3 Notices. All notices, requests, demands, approvals, consents,
-------
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be (a) delivered personally; (b) mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid; (c) sent by nationally recognized next-day or overnight mail or
delivery; or (d) sent by facsimile transmission, provided that the original copy
thereof also is sent by certified or registered mail.
(i) if to Buyer, to:
Fidelity National Information Solutions, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, President
(ii) if to Seller, to:
XxxxXxxxxxx.xxx, Inc.
______________________________
______________________________
Attn: _______________________
or, in each case, at such other address as may be specified in a written notice
sent in accordance with the provisions of this Section 10.3 to the other parties
hereto. All notices shall be deemed effective and given upon receipt; provided,
--------
however, that if any facsimile
-------
33
notice is received after 5:00 P.M. local time at the place of receipt, it shall
be deemed to have been given as of the next following Business Day.
Section 10.4 Attorneys' Fees. If any party hereto initiates any legal
---------------
action arising out of or in connection with this Agreement, the prevailing party
shall be entitled to recover from the other party all reasonable attorneys'
fees, expert witness fees and expenses incurred by the prevailing party in
connection therewith (including fees and expenses incurred to prosecute any
appeal or to enforce any judgment). This Section 10.4 shall not be deemed merged
into any judgment rendered on this Agreement.
Section 10.5 Liability for Transfer Taxes. Seller shall be responsible
----------------------------
for and pay in a timely manner all sales, use, value added, documentary, stamp,
gross receipts, registration, transfer, conveyance, excise, recording, license
and other similar taxes and fees, if any, arising out of or in connection with
or attributable to the transfer of the Assets effected pursuant to this
Agreement.
Section 10.6 Headings. The headings contained in this Agreement are for
--------
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
Section 10.7 Entire Agreement. This Agreement (including the Schedules
----------------
and Exhibits attached hereto) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between or among
the parties with respect to the subject matter hereof except the confidentiality
provisions set forth in the Confidentiality Agreement.
Section 10.8 Counterparts. This Agreement may be executed (including by
------------
facsimile transmission) with counterpart signature pages or in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
Section 10.9 Governing Law, Etc. This Agreement shall be governed in all
------------------
respects, including as to validity, interpretation and effect, by the internal
Laws of the State of California giving effect to the conflict of laws rules
thereof.
Section 10.10 Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and its respective heirs,
successors and permitted assigns.
Section 10.11 Assignment. This Agreement shall not be assignable or
----------
otherwise transferable by any party hereto without the prior written consent of
the other parties hereto.
Section 10.12 No Third Party Beneficiaries. Except as provided in
----------------------------
Article IX with respect to indemnification of Indemnified Parties hereunder,
----------
nothing in this Agreement shall confer any rights upon any Person other than the
parties hereto and its respective heirs, legal representatives, successors and
permitted assigns.
34
Section 10.13 Amendment; Waivers, etc. No discharge of this Agreement,
-----------------------
and no waiver hereunder, shall be valid or binding unless set forth in writing
and duly executed by the party against whom enforcement of the discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such provisions, rights or privileges hereunder. No amendment or
modification of this Agreement shall be effective unless in a writing executed
by all the parties hereto.
Section 10.14 Acknowledgment. Seller and Buyer each acknowledges that
--------------
the representations, warranties, agreements and covenants contained in this
Agreement and in any document, instrument or certificate delivered pursuant
hereto or in connection herewith shall not be deemed waived or otherwise
affected by or as a result of any investigation by the other.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
FIDELITY NATIONAL INFORMATION
SOLUTIONS, INC., a Delaware corporation
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
XXXXXXXXXXX.XXX, INC., a Nevada
corporation
By:
-----------------------------------
Name: _____________________________
Title: ___________________________
35
EXHIBIT A
Form of Legal Opinion
[Subject to reasonable and customary exceptions and qualifications], we are of
the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each other state
in which the nature of its activities or of its properties owned or leased makes
such qualification necessary, except to the extent that failure to so qualify
would not have a material adverse effect on the Company.
2. The Company has the corporate power and authority to own its properties and
assets, to carry on its business as presently conducted, and to enter into the
Agreement and perform its obligations thereunder.
3. The Agreement has been duly authorized by all necessary corporate action on
the part of the Company and has been duly executed and delivered by the Company.
4. The Agreement is a legal, valid and binding obligation of the Company
enforceable against it in accordance with their respective terms, except as the
enforceability thereof may be subject to or limited by (a) bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar laws
relating to or affecting the rights of creditors, and (b) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law.
5. The execution and delivery of the Agreement and the performance by the
Company of its terms (a) will not breach or result in a violation of the
Company's Articles of Incorporation or Bylaws, or any judgment, order or decree
of any court or arbitrator, known to us, to which the Company is a party or is
subject, (b) will not , to our knowledge, constitute a material breach of the
terms, conditions or provisions of, or constitute a default under, any material
contract, undertaking, indenture or other agreement or instrument identified in
the Company's Annual Report on Form 10-K for the year ended [December 31], 2000,
or filed with the SEC subsequent to the filing of such Form 10-K; and (c)
neither is prohibited by, nor subjects the Company to, a fine, penalty, or other
similar sanction under, any statute or regulation of the State of [California],
or any federal statute or regulation, of a type which are typically applicable
to transactions similar to those transactions contemplated by the Agreement.
6. No consent, approval or authorization of, or designation, declaration or
filing with, any governmental authority is required in connection with the valid
execution, delivery and performance by the Company of the Agreement, other than
such consents, approvals, authorizations, designations, declarations or filings
as have been made or obtained on or before the date hereof or which are not
required to be made or obtained until after the date hereof.
36
7. Except as disclosed in the Agreement or the exhibits and schedules delivered
in connection therewith, there is, to our current actual knowledge, no action,
suit or proceeding pending against the Company or its properties in any court or
before any governmental authority or agency, or arbitration board or tribunal
(a) which seeks to restrain, enjoin, prevent the consummation of, or otherwise
challenge the Agreement or any of the transactions contemplated thereby, or (b)
which, if adversely determined, could reasonably be expected to have a material
adverse effect on the Company or its business or properties (taken as a whole).
37
