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EXHIBIT 10.51
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 12th day of September, 1997, by and among FIDELITY
NATIONAL FINANCIAL, INC., a Delaware corporation ("FNFI"); EXPRESS NETWORK,
INC., a California corporation ("Company"); COLIN XXXXXX XXXXXXXX AND XXXX
XXXXXX XXXXXXXX, AS TRUSTEES OF THE XXXXXXXX FAMILY TRUST UDT, DATED JULY 23,
1987, FARID MESHKATAI, and XXXXX XXXXXX MESHKATAI, AS TRUSTEE OF THE XXXXX
XXXXXX LIVING TRUST, DATED JULY 23, 1987 (collectively, "Shareholders"); XXXXX
X. XXXXXXXX ("Xxxxxxxx"); and ENI ACQUISITION CORPORATION, a California
corporation that is a newly-formed, wholly-owned subsidiary of FNFI ("Newco").
FNFI, Company, Shareholders, Xxxxxxxx and Newco are referred to collectively
herein as the "Parties" or singularly as a"Party."
RECITALS
A. Shareholders are the record and beneficial owners of 2,000 shares of
Company Common Stock (the "Company Shares"), which represents all the issued and
outstanding shares of capital stock of Company.
B. The respective Boards of Directors of FNFI, Company and Newco deem it
advisable and in the best interests of their respective shareholders that
Company merge with and into Newco (the "Merger") pursuant to this Agreement, the
Articles of Merger substantially in the form attached hereto as Exhibit "A" (the
"Articles of Merger") and the applicable provisions of the laws of the State of
California.
C. The Parties hereto expect that the Merger will further certain of
their business objectives, including, without limitation, increased market
share, reduced administrative costs and volume efficiencies.
D. The Boards of Directors of FNFI, Company and Newco have approved and
adopted this Agreement as a plan of reorganization within the provisions of
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
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ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Article
1 shall have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and the plural forms of any of the terms herein
defined. Any capitalized term used in this Agreement and not ascribed a meaning
in this Article 1 shall have the meaning ascribed to such term elsewhere in this
Agreement.
"Action" shall mean any actual or threatened Claim, action, suit,
arbitration, hearing, inquiry, proceeding, complaint, charge or investigation by
or before any Governmental Entity or arbitrator and any appeal from any of the
foregoing.
"Affiliate" shall mean, with respect to a Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
"Articles of Merger" has the meaning set forth in Recital B, above.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or would reasonably form the basis for
any specified consequence.
"Benefit Arrangement" shall mean any form of current or deferred
compensation, bonus, stock option, stock appreciation right, severance pay,
salary continuation, pension, profit-sharing, retirement or incentive plan,
practice or arrangement, any group or individual disability, medical, dental,
health, hospitalization, life insurance or other insurance plans or related
benefits, or any other welfare or similar plan or arrangement for the benefit of
any director, officer or employee, whether active or retired, or for any class
or classes of such directors, officers or employees.
"California Statute" means the general corporation laws set forth in the
California Corporations Code.
"Claims" shall mean any and all liabilities, losses, claims, damages,
causes of action, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments, deficiencies, penalties, fines, interest
(including interests from the date of such damages), and costs and expenses
(including without limitation reasonable attorneys' fees and disbursements of
every kind, nature and description).
"Closing" has the meaning set forth in Section 3.1, below.
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"Closing Balance Sheet" has the meaning set forth in Section 2.2(e),
below.
"Closing Date" has the meaning set forth in Section 3.1, below.
"Closing Fidelity Price" means the average of the per share closing
sales price of FNFI's Common Stock publicly traded on the New York Stock
Exchange for the eight (8) consecutive trading days ending on the date of this
Agreement.
"Code" has the meaning set forth in Recital D, above.
"Company Shares" has the meaning set forth in Recital A.
"Company Stock" means shares of Common Stock, no par value, of Company.
"Confidential Information" means any information concerning the
businesses and affairs of any of the Parties that is not already generally
available to the public.
"CRI Net Worth Deficiency" has the meaning set forth in Section 2.2(e)
of that certain Agreement and Plan of Reorganization of even date herewith by
and among FNFI, Credit Reports, Inc., the shareholder of Credit Reports, Inc.,
Xxxxxxxx and CRI Acquisition corporation (the "CRI Merger Agreement").
"Effective Time" has the meaning set forth in Section 3.1, below.
"Employee Plan" shall mean any "employee benefit plan," as defined in
Section 3(3) of ERISA, which is subject to any provisions of ERISA and covers
any employee, whether active or retired, of the Company.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Fidelity Common Stock" means the shares of non-registered, restricted
Common Stock, par value of $0.0001 per share, of FNFI.
"GAAP" means United States generally accepted accounting principles, as
the same may change from time to time.
"Governmental Entity" shall mean any court, federal, state, local or
foreign government or any administrative agency or commission or any other
governmental authority or instrumentality whatsoever.
"Hazardous Substances" shall mean any hazardous, toxic or infectious
substance, material, gas or waste which is regulated by any Governmental Entity.
"Indebtedness" shall mean, when used with reference to any Person,
without duplication, (i) any liability of such Person created or assumed by such
Person, or any Subsidiary thereof, (a) for borrowed money, (b) evidenced by a
bond, note, debenture, or similar instrument (including a purchase money
obligation, deed of trust or mortgage) given in connection with the acquisition
of, or exchange for, any property or assets (other than inventory or similar
property acquired and consumed in the Ordinary Course of Business), including
securities and other indebtedness, (c) in respect of letters of credit issued
for such Person's account and "swaps" of interest and currency exchange rates
(and other interest and currency exchange rate hedging agreements) to which such
Person is a party or (d) for the payment of money as lessee under leases that
should be, in accordance with GAAP, recorded as capital leases for financial
reporting purposes; (ii) any liability of others described in the preceding
clause (i) guaranteed as to payment of principal or interest by such Person or
in effect guaranteed by such Person through an agreement, contingent or
otherwise, to purchase, repurchase, or pay the related Indebtedness or to
acquire the security therefor; (iii) all Liabilities or obligations secured by a
Lien upon property owned by such Person and upon which Liabilities or
obligations such Person customarily pays interest or principal, whether or not
such Person has assumed or become liable for the payment of such liabilities or
obligations; and (iv) any amendment, renewal, extension, revision or refunding
of any such liability or obligation.
"Intellectual Property" means (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (ii) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (iv) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and
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production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (v) all computer software
(including data and related documentation); (vi) all other proprietary rights;
and (vii) all copies and tangible embodiments thereof (in whatever form or
medium).
"knowledge" means, for purposes of Article 4, below, actual knowledge of
any officer of Company or Shareholders to the fact or matter in question,
without making any investigation.
"Legal Requirement" shall mean any statute, law, ordinance, rule,
regulation, permit, order, writ, judgment, injunction, decree or award issued,
enacted or promulgated by any Governmental Entity or any arbitrator.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Licenses" has the meaning set forth in Section 4.14, below.
"Lien" shall mean all liens (including judgment and mechanics' liens,
regardless of whether liquidated), mortgages, assessments, security interests,
easements, claims, pledges, trusts (constructive or otherwise), deeds of trust,
options or other charges, encumbrances or restrictions.
"Material Adverse Effect" means any event, effect, development,
occurrence or circumstance, individually or when taken together with all other
such events, effects, developments, occurrences or circumstances, causing,
resulting in or having a material adverse effect on (i) the business, assets,
results of operations, business relationships, properties, condition (financial
or otherwise), insurability or prospects of Company; (ii) the ability of the
Parties to consummate the transactions contemplated by this Agreement; or (iii)
the legal right or authorization of Company to continue to operate its business.
"Material Contracts" has the meaning set forth in Section 4.9, below.
"Merger" has the meaning set forth in Recital B, above.
"Net Worth" means the difference between (i) the reviewed aggregate book
value of the assets of Company; and (ii) the reviewed aggregate book value of
the liabilities of Company as reflected on the Reviewed Closing Balance Sheet,
provided that the Parties and/or a national accounting firm (as more fully
explained in Section 2.2(e), below) may (i) make reasonable adjustment to or
establish reasonable reserves for uncollectible accounts receivable; (ii) adjust
the book value of Company's assets or liabilities to account for under- or
over-valued assets or
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liabilities; and/or (iii) make any other adjustments necessary or appropriate in
order to state the Reviewed Closing Balance Sheet in accordance with GAAP.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency and, where appropriate, in accordance with formula).
"Party" has the meaning set forth in the preamble to this Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof), or any other legal
entity.
"Reviewed Closing Balance Sheet" has the meaning set forth in Section
2.2(e), below.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, Lien, other than (i)
mechanic's, materialmen's, and similar liens; (ii) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings; (iii) purchase money liens and liens securing rental
payments under capital lease arrangements; and (iv) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2.1(a),
below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs, duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax or contribution of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2
PLAN OF REORGANIZATION
2.1 The Merger.
(a) The Merger. At the Effective Time (as defined in Section 3.1,
below), Company shall be merged with and into Newco pursuant to this Agreement
and the Articles of Merger, and the separate existence of Company shall cease,
all in accordance with the California Statute. Newco, as it exists from and
after the Effective Time, is sometimes referred to herein as the "Surviving
Corporation." Promptly after the Effective Time, Surviving Corporation shall
change its name to Fidelity National Express Network, Inc.
(b) Effect or of the Merger. Subject to the terms and conditions
of this Agreement and the Articles of Merger, at the Effective Time (i) the
separate existence of Company shall cease and Company shall be merged with and
into Newco; and (ii) the Merger shall have all the effects provided by the
California Statute, this Agreement and the Articles of Merger.
(c) Articles of Incorporation; Bylaws; Directors and Officers.
The Articles of Incorporation of Surviving Corporation from and after the
Effective Time shall be the Articles of Incorporation of Newco until thereafter
amended in accordance with the provisions therein and as provided by the
California Statute. The Bylaws of Surviving Corporation from and after the
Effective Time shall be the Bylaws of Newco as in effect immediately prior to
the Effective Time, continuing until thereafter amended in accordance with their
terms and the Articles of Incorporation of Surviving Corporation and as provided
by the California Statute. The initial directors of Surviving Corporation shall
be the individuals set forth on Schedule 2.1(c)(1), in each case until their
successors are elected and qualified. The initial officers of Surviving
Corporation shall be those individuals holding such titles set forth on Schedule
2.1(c)(2), in each case until their successors are duly elected and qualified.
2.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of FNFI, Newco, Company or
Shareholders, the shares of capital stock of Newco and Company shall be
converted as follows:
(a) Capital Stock of Newco. Each issued and outstanding share of
capital stock of Newco shall continue to be issued and outstanding.
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(b) Cancellation of Certain Shares of Capital Stock of Company.
All shares of capital stock of Company that are owned directly or indirectly by
Company, including all capital stock which has been authorized but not issued,
shall be canceled and no consideration shall be delivered in exchange therefore.
(c) Conversion of Company Shares. The Company Shares shall
automatically be canceled, extinguished and converted, without any action on the
part of the holder thereof, into the right to receive the cash and the shares of
Fidelity Common Stock, as more fully described in subsections (d), (e) and (f),
below. All Company Shares, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and
Shareholders shall cease to have any rights with respect thereto, except the
right to receive the cash and the shares of Fidelity Common Stock to be paid or
issued in consideration therefor upon the surrender of the Certificates in
accordance with subsection (h), below.
(d) Consideration at Closing. In consideration for the
cancellation and exchange by Shareholders of the Company Shares (i) Newco shall,
immediately after the Effective Time and on the Closing Date, pay to
Shareholders the cash sum of Two Million Five Hundred Thousand Dollars
($2,500,000) by delivery, at Newco's option, of a cashier's or certified bank
check, or by wire transfer to an account or accounts designated by Shareholders;
and (ii) FNFI shall, immediately after the Effective Time and on the Closing
Date, issue and deliver to Shareholders Five Million Two Hundred Seventy-Five
Thousand Dollars ($5,275,000) of Fidelity Common Stock, either held in treasury
and transferred to Shareholders or newly issued by FNFI to Shareholders. The
consideration set forth in this subsection (d) is subject to adjustment pursuant
to subsection (e), below. The exact number of shares of Fidelity Common Stock to
be issued pursuant to this subsection (d) shall be based upon the Closing
Fidelity Price. The cash and Fidelity Common Stock due Shareholders under this
subsection (d) and subsections (e) and (f), below, shall be allocated among the
Shareholders in accordance with Schedule 2.2(d) hereto.
(e) Purchase Price Adjustments. Commencing immediately after the
Closing Date, (i) Shareholders shall cause Company to prepare a balance sheet
for Company as of the Closing Date (the "Closing Balance Sheet"); and (ii)
within thirty (30) days following the completion of the Closing Balance Sheet,
the Chief Financial Officer of Company and representatives of FNFI shall jointly
and in good faith review the Closing Balance Sheet and make any adjustments
necessary to state the Closing Balance Sheet in accordance with GAAP (the
"Reviewed Closing Balance Sheet"). If there is a dispute between the Parties
with respect to any particular adjustment, then the disputed adjustment shall be
submitted to a national accounting firm mutually agreed upon by the Parties,
whose determination of the appropriateness and the amount of the adjustment
shall be binding on the Parties. The cost of such accounting firm's services
shall be divided equally between FNFI, on the one hand, and the Shareholders, on
the other hand. If the Net Worth of Company as stated on the Reviewed Closing
Balance Sheet is less than One Million Two Hundred Forty-Five Thousand
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($1,245,000) (the "ENI Net Worth Deficiency"), then the post-closing payments
described in subsection (f), below (the "Post-Closing Payments"), that are due
on each of the first two (2) anniversaries of the Closing Date, shall each be
reduced by one-half (1/2) of the amount of the ENI Net Worth Deficiency;
provided, however, that if the ENI Net Worth Deficiency plus the CRI Net Worth
Deficiency exceeds One Million Three Hundred Eighty-Seven Thousand Five Hundred
Dollars ($1,387,500) (such excess is hereinafter referred to as the "Combined
Excess Deficiency"), then their shall be no obligation to make the Post-Closing
Payments on the first two (2) anniversaries of the Closing Date and the Combined
Excess Deficiency shall first be deducted from the Post-Closing Payments due on
the third anniversary of the Closing Date and then, if necessary, from the
Post-Closing Payments due on the fourth anniversary of the Closing Date. If the
Net Worth of Company as stated on the Reviewed Closing Balance Sheet is greater
than One Million Two Hundred Forty-Five Thousand Dollars ($1,245,000) (the "Net
Worth Surplus"), then the Post-Closing Payments due on each of the first two (2)
anniversaries of the Closing Date, shall each be increased by the amount of
one-half (1/2) of the Net Worth Surplus. Notwithstanding anything to the
contrary above, the Parties hereto expressly agree that any downward adjustments
for those items set forth on Schedule 2.2(e) hereto shall only reduce Net Worth
on the Reviewed Closing Balance Sheet by one-half (1/2) of the amount of such
adjustment.
(f) Post-Closing Consideration. Subject to Section 2.2(d), above,
and Section 2.2(d) of the CRI Merger Agreement, in the event the Merger is
consummated, on each of the first four (4) anniversaries of the Closing Date,
Surviving Corporation shall pay to Shareholders in cash and without interest the
sum of Six Hundred Ninety-Three Thousand Seven Hundred Fifty Dollars ($693,750).
(g) Payment of Certain Company Obligations. Immediately after the
Effective Time and on the Closing Date FNFI shall pay the principal balance of
the following Company obligations: (i) that certain Loan Agreement, dated
November 3, 1995, by and between Company and the FKN Organization Ltd. in the
principal amount of $500,000, a copy of which is attached hereto on Schedule
2.2(g)(1); and (ii) a series of loans made by Xxxx Xxxxxx to Company in the
aggregate outstanding principal amount of $415,000, evidence for which are
attached hereto on Schedule 2.2(g)(2).
(h) Certificate Delivery Requirement. At the Effective Time,
Shareholders shall deliver to FNFI the certificates (the "Certificates")
representing the Company Shares, duly endorsed in blank by Shareholders, or
accompanied by blank stock powers, and with all necessary transfer tax and other
revenue stamps affixed and canceled. The Certificates so delivered shall be
promptly canceled. Until delivered as contemplated by this subsection (h), each
Certificate shall be deemed at any time after the Effective Time to represent
the right to receive upon such surrender a pro rata portion of the consideration
set forth in subsections (d), (e) and (f), above.
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ARTICLE 3
CLOSING
3.1. Closing. The consummation of the Merger and the other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of FNFI, located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxxx, Xxxxxxxxxx
00000, on such date (the "Closing Date") and at such time as may be mutually
designated by the Parties within five (5) business days following the
satisfaction or waiver of the conditions set forth in Article 8, below
(including, without limitation, the Requisite Regulatory Approvals), or such
other date, time, place and manner as the Parties may mutually agree. On the
Closing Date, the Articles of Merger and any required officers' certificates,
shall be filed with the Secretary of State of the State of California in
accordance with the provisions of the California Statute. The Merger shall
become effective upon such filing or such later time on the Closing Date as may
be specified in the filing with the Secretary of State of the State of
California (the "Effective Time"). Either FNFI or Shareholders may terminate
this Agreement without Liability to the other if the Closing does not occur on
or before October 31, 1997.
3.2 Mutual Deliveries at Closing. Provided that all of the conditions to
the Closing set forth in Article 8, below, have been satisfied or waived by the
Party benefitting therefrom, the appropriate Parties or Persons shall execute
and deliver or cause to be delivered to the appropriate Parties at Closing the
following:
(a) The Employment Agreement in substantially the form of
Exhibit "B" hereto; and
(b) The Registration Rights Agreement substantially in the form
of Exhibit "C" hereto.
3.3 Shareholders' Deliveries at Closing. Provided that all of the
conditions to the Closing set forth in Article 8, below, have been satisfied or
waived by the Party benefiting therefrom, Shareholders shall execute and deliver
or cause to be delivered to FNFI at the Closing the following documents:
(a) The Certificates, in accordance with Section 2.2(h), above;
(b) Company's original minute book, such minute book to contain
(i) original Articles of Incorporation and all amendments thereto, or
copies thereof if the originals are unavailable; (ii) Company's Bylaws
presently in effect; (iii) Company's stock transfer records together
with all available canceled stock certificates; and (iv) all minutes of
meetings or consents in lieu of such meetings of Company's Board of
Directors and shareholders; and
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(c) Such other documents and instruments as may be specified in
this Agreement or otherwise reasonably requested by FNFI in order to
consummate the transactions contemplated hereby.
3.4 Company's Deliveries at Closing. Provided that all of the conditions
to the closing set forth in Article 8, below, have been satisfied or waived from
the Party benefitting therefrom, Company shall execute and deliver or cause to
be delivered to FNFI at the Closing the following:
(a) An Officer's Certificate dated the Closing Date
substantially in the form of Exhibit "D" hereto;
(b) A Secretary's Certificate dated the Closing Date
substantially in the form of Exhibit "E" hereto;
(c) An opinion of counsel substantially in the form of Exhibit
"F" hereto;
(d) A good standing certificate of Company, dated within fifteen
(15) business days of the Closing Date, for each jurisdiction in which
Company is required to be qualified and authorized to do business;
(e) Minutes of the Board of Directors and shareholders of
Company authorizing and approving this agreement and the transactions
contemplated herein;
(f) Resignations of all of the officers and directors of Company
effective as of the Closing Date; and
(g) Such other documents and instruments as may be specified in
this Agreement or otherwise reasonably requested by FNFI in order to
consummate the transactions contemplated hereby.
3.5 FNFI's Deliveries. Provided that all of the conditions to the
Closing set forth in Article 8, below, have been satisfied or waived by the
Party benefiting therefrom, FNFI shall execute and deliver or cause to be
delivered to the Shareholders at the Closing:
(a) The Fidelity Common Stock in accordance with Section 2.2(d),
above; and
(b) Such other documents and instruments as may be specified in
this Agreement or otherwise reasonably requested by Shareholders in
order to consummate the transactions contemplated hereby.
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3.6 Newco's Deliveries at Closing. Provided that all of the conditions
to the Closing set forth in Article 8, below, have been satisfied or waived by
the Party benefitting therefrom, Newco shall deliver to the appropriate Party or
Person at the Closing:
(a) The cash consideration in accordance with Section 2.2(d),
above; and
(b) The cash for the loan payments in accordance with Section
2.2(g), above.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
Company and Shareholders (which for purposes of this Article 4 shall
include Xxxxxxxx), jointly and severally, represent and warrant to FNFI, Newco
and Surviving Corporation that (except for changes contemplated by this
Agreement), each of the following statements is true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing Date (each such statement to be made again by Company and Shareholders
on that date with the Closing Date being substituted for the date of this
Agreement throughout this Article 4):
4.1 Organization and Standing; Articles and Bylaws. Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, has full power and authority to own its assets and
properties and to carry on its business as presently conducted. Company is duly
qualified and authorized to do business, and is in good standing as a foreign
corporation, in each jurisdiction where the nature of its activities and of its
properties (both owned and leased) make such qualification necessary, except
where the failure to so qualify would not have a Material Adverse Effect.
Company has furnished FNFI with copies of its Articles of Incorporation and
Bylaws, as amended to the date hereof. Said copies are true, correct and
complete and contain all amendments through the Closing Date.
4.2 Authorization. All corporate action on the part of Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement and the documents contemplated hereby, the
performance of all of Company's and Shareholders' obligations hereunder and
thereunder, and for the exchange and cancellation of the Company Shares have
been taken or will be taken prior to the Closing. This Agreement and the
documents contemplated hereby, when executed and delivered, shall constitute
valid and legally binding obligations of Company and Shareholders enforceable in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and subject to the
availability of equitable remedies.
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4.3 Subsidiaries. Company has no Subsidiaries and does not presently
own, of record or beneficially, or control, directly or indirectly, any capital
stock, securities convertible into capital stock or any other equity interest in
any corporation, association or business entity, nor is the Company, directly or
indirectly, a participant in any joint venture, partnership or other entity.
4.4 Capitalization. The authorized capital stock of Company consists of
10,000 shares of Common Stock, of which 2,000 shares are issued and outstanding.
All of the Company Shares have been duly authorized and validly issued, are
fully paid and non-assessable and are owned of record and beneficially by
Shareholders in the amounts set forth in Schedule 4.4 hereto, free and clear of
all Liens, Claims, Indebtedness and Security Interests of every kind. All of the
Company Shares were offered, issued, sold and delivered by Company in compliance
with all applicable state and federal laws concerning the issuance of
securities. None of the Company Shares were issued in violation of any
preemptive rights created by statue, or by Company's charter documents, or by
any agreement to which Company may be bound. Schedule 4.4 hereto contains a
complete list of, and the number of shares owned of record by, the holders of
the issued and outstanding Company Stock.
Other than as described in this Section 4.4, there are no outstanding
shares of Company Stock, preferred stock or any other equity securities of
Company, and there are no options, warrants, calls, conversion rights,
commitments or agreements of any character to which Company or any Shareholders
may be bound that do or may obligate Company to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of Company Stock, preferred
stock or other equity securities or that do or may obligate Company to grant,
extend or enter into any such option, warrant, call, conversion right,
commitment or agreement. There are no outstanding arrangements, agreements,
commitments or understandings of any kind affecting or relating to the voting,
issuance, purchase, redemption, repurchase or transfer of any capital stock of
Company or any other securities of Company. Other than as provided in or
contemplated by this Agreement, neither Company nor Shareholders have, or prior
to the Effective Time will have, become a party to or subject to any contract or
obligation wherein any Person has a right or option to purchase or acquire any
rights in any additional capital stock or securities of Company.
4.5 Financial Statements. Schedule 4.5 hereto includes (i) true,
complete and correct copies of Company's balance sheet as of December 31, 1996
(the end of its most recently completed fiscal year) and statements of income,
cash flows and retained earnings for the year ended December 31, 1996; and (ii)
true, complete and correct copies of Company's balance sheet as of July 31, 1997
and statements of income, cash flows and retained earnings for the period then
ended. The above described financial statements have been prepared in accordance
with GAAP consistently applied and fairly present the financial position of
Company as of the dates thereof and the results of its
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operations and cash flows for the periods then ended, subject, in the case of
the July 31, 1997 financial statements to the omission of complete footnote
information and Liabilities that under GAAP would not be included in a balance
sheet not bearing footnotes. Except as set forth above and in the Schedules
hereto, there are no material Company Liabilities, direct or indirect, fixed or
contingent, which are not reflected (i) in the balance sheet as of July 31,
1997, except for Liabilities incurred in the ordinary course of business
subsequent to July 31, 1997, which, either individually or in the aggregate, are
not material; and (ii) in the Closing Balance Sheet. Except as set forth above,
there is no basis for any assertion against Company of any Liability or
obligation of any nature whatsoever that is not fully reflected in the financial
statements delivered to FNFI which, either individually or in the aggregate,
would have a Material Adverse Effect. Since the date of the July 31, 1997
financial statements, there have been no material changes in Company's
accounting policies.
4.6 Material Contracts. Schedule 4.6 hereto contains a complete and
accurate list of all Material Contracts to which Company is a party or bound.
Without limiting the generality of the foregoing, such list includes all such
contracts and agreements and all licenses and instruments which (i) grant a
Security Interest or permit or provide for the imposition of any Lien on, or
provide for the sale (other than in the Ordinary Course of Business) of, any of
the assets of Company or of any of the shares of the Company Stock; (ii) require
the consent of any third party to, or would interfere with, the consummation by
Company or Shareholders of the transactions contemplated by this Agreement;
(iii) involve the borrowing of money or provide for capital expenditures to be
made in the future; or (iv) relate to Company's Intellectual Property rights.
True, correct and complete copies of all Material Contracts listed on Schedule
4.6 have been furnished by Company to FNFI. Each Material Contract so listed is
a valid and binding obligation of Company and is enforceable in accordance with
its terms. Company has performed all material obligations required to be
preformed by it to date and is not in default under or in breach of any term or
provision of any Material Contract to which Company is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such a default or breach under any
Material Contract. To the best knowledge of Company and Shareholders, no party
with whom Company has a Material Contract is in default of its obligations
thereunder. Except as set forth on Schedule 4.6, no consent or approval of any
party to any of the Material Contracts is necessary in order to permit Company
to consummate the transactions contemplated hereby.
4.7 Assets Other Than Real Property. Except as set forth on Schedule 4.7
hereto, Company has good and marketable title to all properties and assets
(other than real property which is subject to Section 4.8, below) owned or
leased by Company, free and clear of all Liens except for: (i) Liens for current
Taxes not yet due and payable which have been fully reserved for; and (ii)
Liens, if any, that are not
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substantial in character, amount or extent and do not detract materially from
the value, or interfere with present use or the sale or other disposition, of
the property subject thereto or affected thereby. The assets and properties of
Company constitute all the assets, properties, rights, privileges and interests
necessary for the operation of Company's business. All of the vehicles, material
machinery and material equipment of Company are in good working order and
condition, ordinary wear and tear excepted.
4.8 Real Property. Company does not own any real property. Schedule 4.8
hereto contains an accurate list and general description of all real property
leases, subleases, licenses or similar agreements ("Leases") to which Company is
a party (copies of which have been previously furnished to FNFI), in each case
setting forth (i) the landlord and tenant or sublessor and sublessee, as
applicable, thereof and the date and term of each of the Leases; (ii) the legal
description or street address of each property covered thereby; and (iii) a
brief description (including size and function) of the principal improvements
and buildings thereon (the "Leased Premises"). Company has valid leasehold
interests in the Leased Premises, free and clear of all Liens and Security
Interests, except for (i) Claims of lessors, co-lessees or sublessees in such
matters as are reflected in the Leases; (ii) title exceptions affecting the fee
estate of the lessor under such Leases; (iii) Liens for taxes not yet due; and
(iv) other matters as described in Schedule 4.8 hereto. Company is not in
default, and no facts or circumstances have occurred which, through the passage
of time or both, or the giving of notice would constitute a default, under any
Lease. To the knowledge of Company and Shareholders, the activities of Company,
with respect to the Leased Premises, are in all material respects permitted and
authorized by applicable zoning laws, ordinances and regulations and all laws
and regulations of any Governmental Entity. To the knowledge of Company and
Shareholders, the portions of the buildings on the Leased Premises that are used
in the business of Company are each in good repair and condition (including
without limitation, the electrical, mechanical, HVAC, plumbing, elevator, other
building systems and structural components serving such premises, and the roofs
are water-tight), and are in the aggregate sufficient to satisfy Company's
current and reasonable anticipated normal business activities as conducted
thereat.
4.9 No Conflicts. Neither the execution and delivery nor the performance
of this Agreement by Company or Shareholders will result in any of the
following: (i) a default or an event that, with notice or lapse of time or both,
could be a default, breach or violation of (A) the Articles of Incorporation or
Bylaws of Company, (B) any contract, lease, license, franchise, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust,
security or pledge agreement, or other agreement, instrument, or arrangement to
which Company or any Shareholder is a party or by which any of their respective
properties or any of their respective assets are bound and which is material to
Company or any Shareholder (a "Material Contract"); (ii) the termination of any
Material Contract or the acceleration of the maturity of any
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indebtedness or other material obligation of Company or any Shareholder; (iii)
the creation or imposition of any Lien on any of the respective assets or
properties of Company or any Shareholder or any shares of the Company Stock;
(iv) a violation or breach of any writ, injunction or decree of any Governmental
Entity to which Company or any Shareholder is a party or by which any of their
respective properties are bound.
4.10 Litigation. Except as set forth in Schedule 4.10 hereto, to the
knowledge of Company or Shareholders there are no actions, proceedings, or
investigations before any court or administrative agency pending or currently
threatened against or with respect to Company (or to the knowledge of Company
and Shareholders any Basis therefor), which question the validity of this
Agreement or any action taken or to be taken in connection herewith, or which,
individually or in the aggregate, might result in a Material Adverse Effect, or
in any material impairment of the right or ability of each to carry on its
business as now conducted or as proposed to be conducted, or in any material
Liability on the part of Company. Company is not a party or subject to, and none
of its assets are bound by, the provisions of any order, writ, injunction,
judgment, or decree of any Governmental Entity.
4.11 Taxes. Company has no Liability for any federal, state or local
Taxes, except for Taxes which have accrued and are not yet payable. Company has
filed or caused to be filed all Tax Returns required under applicable law to be
filed on or before the Closing Date, Company has paid or made provision for all
Taxes and other charges which have or may become due for the periods covered by
such Tax Returns, and all such Tax Returns are true, correct and complete in all
respects. Except as set forth on Schedule 4.11 hereto, none of the Tax Returns
of Company are currently under investigation or audit, nor to the knowledge of
Company or Shareholders is an investigation or audit pending, and there has not
been an investigation or audit of the Tax Returns of Company in the past seven
(7) years. There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax Return for any period. The
accounting treatment of all items of income, gain, loss, deduction and credit as
reported on all Tax Returns and estimates filed by or on behalf of Company are
true, correct and complete, and all deferred Taxes and all Taxes due for the
period ending on the Closing Date have been accrued on the Balance Sheet of the
July 31, 1997 Financial Statements and will be on the Closing Balance Sheet. No
Claim has ever been made by any Governmental Entity in a jurisdiction where
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. All taxes owed by Company or which Company is obligated to
withhold from amounts owed or owing to any employee, independent contractor,
stockholder, creditor or third party have been paid or withheld. There are no
unresolved Claims concerning Company's Tax Liability, and no basis for any such
Claims exist.
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4.12 Employees. Schedule 4.12 hereto sets forth a complete list of all
current employees of Company, together with each employee's age, tenure with
Company, title or job classification, and the current annual rate of
compensation payable to each such employee. There are no unfair labor practice
complaints, strikes, slowdowns, stoppages or other controversies to the best
knowledge of Company or Shareholders pending or attempts to unionize or
controversies threatened between Company and, or relating to, any of its
employees. Company is not a party to any collective bargaining agreement with
respect to any of its employees or to a written employment contract with any of
its employees, except as set forth on Schedule 4.12 hereto, and there are no
understandings or agreements with respect to the employment of any officer or
employee of Company which are not terminable by Company without liability on not
more than thirty (30) days' notice. Except as set forth on Schedule 4.12 hereto,
no officer, director, or employee is entitled to receive any payment of any
amount under any existing agreement, severance plan or other benefit plan, or to
the accrual or vesting of any other benefit or payment as a result of the
consummation of any transactions contemplated by this Agreement. Company has
complied with all applicable federal and state statutes and regulations which
govern workers' compensation, equal employment opportunity and equal pay.
Company's employment of each of its employees is in compliance with all
immigration and naturalization laws of the United States.
4.13 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any Governmental Entity, required on the part of Company and/or
any Shareholder in connection with the valid execution and delivery of this
Agreement and the exchange and cancellation of the Company Stock, or the
consummation of any other transaction contemplated hereby have been obtained, or
will be effective at the Closing.
4.14 Operating Rights. Company has all operating authority, licenses,
franchises, permits, certificates, consents, rights and privileges
(collectively, "Licenses") as are necessary or appropriate to the operation of
its business as now conducted and as proposed to be conducted the absence of
which will cause a Material Adverse Effect. Such Licenses are in full force and
effect, no violations have been or, to the knowledge of Company or Shareholders,
are expected to have been recorded in respect of any such Licenses, and no
proceeding is threatened or, to the knowledge of Company or Shareholders,
pending that could result in the revocation or limitation of any such Licenses.
Company has conducted its business so as to comply in all material respects with
all such Licenses.
4.15 Compliance with Applicable Laws. The business and operations of
Company have been and are being conducted in all material respects in compliance
with all laws, ordinances, regulations, rules, orders, judgments or decrees to
which Company is subject. Company holds, and the properties, assets, operations
and
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businesses of Company have been maintained and conducted in all material
respects in compliance with, all authorizations, permits, licenses,
certificates, variances, exemptions, orders, franchises, rights and approvals
that are necessary for the conduct of its businesses. No investigation or review
by any Governmental Entity with respect to Company is threatened or, to the best
knowledge of Company or Shareholders, pending, nor has any Governmental Entity
indicated to Company an intention to conduct the same.
4.16 Insurance. Schedule 4.16 hereto sets forth an accurate list, as of
August 30, 1997, of all insurance policies carried by Company and all insurance
loss runs or workers' compensation claims received for the past two (2) policy
years. Attached to Schedule 4.16 hereto are true, complete and correct copies of
the summaries from the insurance company agent of all current insurance
policies, all of which are in full force and effect. All premiums payable under
all such policies have been paid and Company is otherwise in full compliance
with the terms of such policies (or other policies providing substantially
similar insurance coverage). Neither Company nor Shareholders knows of any
threatened termination of or material premium increase with respect to, any of
such policies. All claims previously made under such policies have been timely
filed.
4.17 Absence of Changes. Except as disclosed in Schedule 4.17 hereto,
since January 1, 1997, there has not been (i) any change or amendment in the
Articles of Incorporation, Bylaws or other governing instruments of Company;
(ii) any sale or issuance of, or grant of options or rights to acquire, any
shares of the Company Common Stock or other securities of Company or any
declaration, setting aside, or payment of dividends or redemptions in respect of
any shares of capital stock of Company, or any direct or indirect redemption,
purchase, or other acquisition of such stock, or any agreement, understandings
or commitments to do the same; (iii) any transfer or other disposition or pledge
of, or the grant of options or rights to acquire, any of the outstanding shares
of the Company Common Stock by any Shareholder; (iv) any amendment, termination
or revocation, or any threat of any amendment, termination, or revocation having
a Material Adverse Effect, of any Material Contract; (v) any sale, transfer,
mortgage, pledge, or subjection to Lien of, on or affecting any of the assets of
the Company out of the Ordinary Course of Business; (vi) any increase in the
compensation paid or payable or in the fringe benefits provided to any employee
of Company out of the Ordinary Course of Business, or the adoption of any
employee benefit plans not in existence in the fiscal year ended December 31,
1996; (vii) any damage, destruction or loss, whether or not covered by
insurance, of any of the assets of Company that has a Material Adverse Effect;
(viii) any purchase or lease, or commitment for the purchase or lease, of
equipment or other capital items not disclosed in Company's financial statements
which is in excess of the normal, ordinary and usual requirements of the
business of Company; (ix) any change that by itself or together with other
changes, has had a Material Adverse Effect; (x) any agreement or
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arrangement made by Company or any Shareholder to take any action which, if
taken prior to the date hereof, would have made any representation or warranty
set forth in this Agreement untrue or incorrect as of the date when made; or
(xi) the commencement or notice or, to the best knowledge of Company and
Shareholders, threat of commencement of any lawsuit or proceeding against or
investigation of Company or any of its affairs.
4.18 Employee Plans. Schedule 4.18 hereto sets forth a complete list of
all Employee Plans and Benefit Arrangements maintained, administered or
contributed to, or otherwise participated in, by Company. A true and complete
copy of each such Employee Plan or Benefit Arrangement, including amendments
thereto, have been provided to FNFI, together with true and complete copies of
(i) annual reports for the most recent three (3) years (Form 5500 Series
including, if applicable, Schedules A and B thereto); (ii) all plan documents
and the most recent summary plan description of each such Employee Plan,
together with any modifications thereto; and (iii) the most recent favorable
determination letter (if applicable) from the Internal Revenue Service for each
such Employee Plan. None of the Employee Plans is a "multiemployer plan" as
defined in Section 3(37) of ERISA or a "multiple employer plan" as covered in
Section 412(c) of the Code, and the Company has not been obligated to make a
contribution to any such multiemployer or multiple employer plan. All
contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each such Employee Plan
or Benefit Arrangement and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee Plan
or Benefit Arrangement or accrued in accordance with past custom and practice of
Company. Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and each trust maintained pursuant thereto is
exempt from income tax under Section 501(a) of the Code. Neither Company nor any
Employee Plan, nor any trusts created thereunder, nor any trustee, administrator
nor any other fiduciary thereof, has engaged in a "prohibited transaction," as
defined in Section 406 of ERISA and Section 4975 of the Code, or any breach of
fiduciary duty as defined in Part 4 of Subtitle B of Title I of ERISA.
4.19 Intellectual Property Rights.
4.19.1 Company owns, or has the right to use, sell or license all
Intellectual Property necessary or required for the conduct of its business as
presently conducted and such rights to use, sell or license are reasonably
sufficient for such conduct of Company's business. To the knowledge of Company
and Shareholder, Company has taken all reasonable and practicable action
designed to safeguard and maintain the secrecy and confidentiality of, and its
proprietary right in, all of its Intellectual Property.
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4.19.2 Neither the manufacture, marketing, license, sale or
intended use of any Intellectual Property licensed or sold by Company or
currently under development by Company violates any license or agreement between
Company and any third party or infringes any Intellectual Property of any other
Person; and there is not pending or, to the best knowledge of Company and
Shareholders, threatened any claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any Intellectual Property
or that the proposed use, sale, license or disposition thereof conflicts or will
conflict with the rights of any other party, nor to the best knowledge of the
Company and Shareholders, is there any basis for any such assertion.
4.20 Environment, Health and Safety.
4.20.1 Company has complied with all Environmental, Health and
Safety Laws, except where failure to comply would not have a Material Adverse
Effect, and no Claim has been filed or commenced against it alleging any failure
to so comply. Without limiting the generality of the preceding sentence, Company
has obtained and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables which are
contained in, all Environmental, Health, and Safety Laws, except where failure
to comply would not have a Material Adverse Effect.
4.20.2 Company has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form a reasonable Basis for any present or
future Claim against Company giving rise to any Liability, except where having
done so would not have a Material Adverse Effect. Company has no Liability for
damage to any site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law which could have a
Material Adverse Effect.
4.20.3 To the best of Company's and Shareholders' knowledge, all
properties used in its business are free of Hazardous Substances, except where
the existence thereof would not have a Material Adverse Effect.
4.21 Certain Transactions. There are no existing or pending
transactions, nor are there any agreements or understandings, between Company
and any Shareholder, or the officers, directors, or employees of Company, or any
Person affiliated with any of them, including, without limitation, any
transactions, arrangements or understandings relating to the purchase or sale of
goods or services or the sale, lease or
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use of any of the assets of or by Company, with or without adequate
compensation, or to any indebtedness owed to or by Company, in any amount
whatsoever.
4.22 Investment Representations. Each Shareholder is receiving the
Fidelity Common Stock for his, her or its own account for investment purposes
only, and not as a nominee or agent for any other Person, and not with a view to
or for resale in connection with any distribution thereof. Each Shareholder
acknowledges that the Fidelity Common Stock to be issued hereunder will not be
registered under the Securities Act, nor qualified under any state securities
laws on the ground, among others, that no distribution or public offering is to
be effected.
4.23 Absence of Claims Against Company. No Shareholder has any Claims
against the Company.
4.24 Bank Accounts; Powers of Attorney. Schedule 4.24 hereto sets forth
an accurate list, as of the date of this Agreement, of the following: (i) the
name of each financial institution in which Company has any account or safe
deposit box; (ii) the names in which the accounts or boxes are held; (iii) the
type of account; and (iv) the name of each person authorized to draw thereon or
have access thereto. Schedule 4.24 hereto also sets forth the name of each
Person holding a general or special power of attorney from Company and a
description of the terms of such power.
4.25 Tax-Free Reorganization. This Agreement, the Merger and the
transactions contemplated thereby qualify, in all respects, as a tax-free
reorganization pursuant to Code Section 368(a)(2)(D).
4.26 Continuity of Interest. No Shareholder has any present plan,
intention or arrangement to dispose of any of the shares of Fidelity Common
Stock issued hereunder in a manner that would cause the Merger to violate the
continuity of shareholder interest requirement set forth in Treasury Regulation
Section 1.368-1.
4.27 Line of Credit. The outstanding balance under that certain Business
Loan Agreement, dated March 1, 1996, as amended, a copy of which is attached to
Schedule 4.28 hereto is less than One Million Dollars ($1,000,000).
4.28 Brokers' Fees. Neither Company nor any Shareholder has any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
4.29 Full Disclosure. Neither this Agreement, the representations and
warranties by Company and/or Shareholders contained herein, the Exhibits or
Schedules hereto, nor any other written statement or certificate delivered or to
be furnished to FNFI in connection herewith, when read together, contain any
untrue
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statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to Company or Shareholders which has not been disclosed to FNFI
that would have a Material Adverse Effect on Company's business or financial
condition or its ability to perform its obligations under this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FNFI AND NEWCO
FNFI and Newco represent and warrant to Company and Shareholders that
(except for changes contemplated by this Agreement) each of the following
statements is true, correct and complete as of the date of this Agreement and
will be true, correct and complete as of the Closing Date (each such statement
to be made again by FNFI and Newco on that date with the Closing Date being
substituted for the date of this Agreement throughout this Article 5):
5.1 Organization and Good Standing. FNFI and Newco are corporations duly
organized, validly existing and in good standing under the laws of the States of
Delaware and California, respectively, and have all requisite corporate power
and authority to own, operate and lease their properties and to carry on their
respective business as they are being conducted on the date of this Agreement.
FNFI and Newco have all requisite corporate power and authority to enter into
this Agreement and to perform their respective obligations hereunder with
respect to the consummation of the transactions contemplated hereby.
5.2 Authorization. The execution and delivery of this Agreement by FNFI
and Newco and the consummation of the transactions contemplated hereby will be
duly authorized by all necessary corporate action on the part of FNFI and Newco,
respectively, prior to the Closing Date. This Agreement has been duly executed
and delivered by FNFI and Newco and constitutes a legal, valid and binding
obligation of FNFI and Newco, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles.
5.3 Noncontravention. Neither the execution and delivery of this
Agreement by FNFI and Newco nor the consummation of the transactions
contemplated hereby by FNFI and Newco will (i) violate any statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Entity to which FNFI or Newco is subject or any provision of
the charter or bylaws of FNFI and Newco; or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
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instrument or other arrangement to which either FNFI or Newco is a party or by
which they are bound or to which any of their assets is subject, except where
the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a material
adverse effect on the ability of FNFI and/or Newco to consummate the
transactions contemplated by this Agreement.
5.4 Fidelity SEC Documents. FNFI has filed all forms, reports and
documents required to be filed with the SEC (the "Fidelity SEC Documents"), all
of which have been made available to Company. As of their respective dates, the
Fidelity SEC Documents complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Fidelity SEC Documents,
and none of the Fidelity SEC Documents contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of FNFI included
in the Fidelity SEC Documents comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto, or in the case of the unaudited interim financial statements, as
permitted by Form 10-Q promulgated by the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to recurring audit
adjustments normal in nature and amount) the consolidated financial position of
FNFI as at the dates thereof and the consolidated results of its operations and
cash flows or changes in financial position for the periods then ended.
5.5 Fidelity Common Stock. All of the shares of Fidelity Common Stock to
be issued to Shareholders in connection with the Merger shall be duly
authorized, validly issued, fully paid and non-assessable. Such shares shall be
offered, issued, sold and delivered by FNFI in compliance with all applicable
state and federal laws concerning the issuance of securities and none of such
shares shall be issued in violation of the preemptive rights of any shareholder
of FNFI.
5.6 Brokers' Fees. Neither FNFI nor Newco is a party to or obligated
under any agreement with any broker, agent, or finder relating to the
transactions contemplated hereby, and neither the execution of this Agreement
nor the consummation of the transactions provided for herein will result in any
liability to any broker, agent, or finder.
5.7 Disclosure. The representations and warranties contained in this
Article 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained herein, in light of the circumstances under which they are
made, not misleading.
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ARTICLE 6
CONDUCT OF BUSINESS PENDING CLOSING
During the period commencing on the date hereof and continuing through
the Closing Date, Company and Shareholders (which for purposes of this Article 6
shall include Xxxxxxxx), jointly and severally, covenant and agree that:
6.1 Qualification. Company shall maintain all qualifications to transact
business and remain in good standing in its jurisdiction of incorporation and in
the foreign jurisdictions in which Company owns or leases any property or
conducts any business.
6.2 Ordinary Course. Company shall conduct its business in, and only in,
the Ordinary Course of Business and, to the extent consistent with such
business, shall not make or institute any unusual or novel methods of
management, accounting, or operation that vary materially from those methods
used by the Company as of July 31, 1997. Company will use its reasonable
business efforts to preserve its business organizations intact, to keep
available to Company its present officers and employees, and to preserve its
present relationships with suppliers, customers, and others having business
relationships with the Company. Company shall maintain its properties and assets
in good condition and repair.
6.3 Corporate Changes. Company shall not (i) amend its Articles of
Incorporation or Bylaws (or equivalent documents); (ii) except as required by
Section 7.1(g), below, acquire by merging or consolidating with, or agreeing to
merge or consolidate with, or purchase substantially all of the stock or assets
of, or otherwise acquire, any business or any corporation, partnership,
association or other business organization or division thereof; (iii) enter into
any partnership or joint venture; (iv) declare, set aside, make or pay any
dividend or other distribution in respect of its capital stock or purchase or
redeem, directly or indirectly, any shares of its capital stock; (v) issue or
sell any shares of its capital stock of any class or any options, warrants,
conversion or other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares; or (vi) liquidate or dissolve
or obligate itself to do so.
6.4 Indebtedness. Company shall not incur any Indebtedness, sell any
debt securities or, except in the Ordinary Course of Business, lend money to or
guarantee the Indebtedness of any Person. Company shall not restructure or
refinance its existing Indebtedness. Notwithstanding anything to the contrary in
this Section 6.4, Company may, subject to Section 6.16, below, borrow under its
line of credit as needed in the Ordinary Course of Business.
6.5 Accounting. Company shall not make any change in the accounting
principles, methods, records or practices followed by it or depreciation or
amortization policies or rates heretofore adopted by it. Company shall maintain
its books, records, and accounts in accordance with GAAP applied on a basis
consistent with that of prior periods.
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6.6 Compliance with Legal Requirements. Company shall comply promptly
with all requirements that applicable law may impose upon it and its operations
and with respect to the transactions contemplated by this Agreement, and shall
cooperate promptly with, and furnish information to, FNFI in connection with any
such requirements imposed upon FNFI, or upon any of its Affiliates, in
connection therewith or herewith.
6.7 Disposition of Assets. Other than in the Ordinary Course of
Business, Company shall not sell, transfer, license, lease or otherwise dispose
of, or suffer or cause the encumbrance by any Lien upon any of its properties or
assets, tangible or intangible, or upon any interest therein.
6.8 Compensation. Company shall not (i) adopt or amend in any material
respect any collective bargaining, bonus, profit-sharing, compensation, stock
option, pension, retirement, deferred compensation, Employee Plan, Benefit
Arrangement, or any other agreement, trust, fund or arrangement for the benefit
of employees other than to comply with any Legal Requirement; or (ii) other than
in the Ordinary Course of Business, pay, or make any accrual or arrangement for
payment of, any increase in compensation, bonuses or special compensation of any
kind, or any severance or termination pay to, or enter into any employment or
loan or loan guarantee agreement with, any current or former officer, director,
employee or consultant of Company.
6.9 Modification or Breach of Agreements; New Agreements. Company shall
not terminate or modify, or commit or cause or suffer to be committed any act
that will result in breach or violation of any term of or (with or without
notice or passage of time, or both) constitute a default under or otherwise give
any Person a basis for nonperformance under, any Material Contract, written or
oral, disclosed in this Agreement or the Schedules hereto. Company shall refrain
from becoming a party to any contract or commitment other than in the Ordinary
Course of Business. Company shall meet all of its contractual obligations in
accordance with their respective terms.
6.10 Capital Expenditures. Except for capital expenditures or
commitments in the Ordinary Course of Business necessary to maintain its
properties and assets in good condition and repair (the amount of which shall
not exceed $25,000 in the aggregate), Company shall not purchase or enter into
any contract to purchase any capital assets.
6.11 Consents. Company shall use its reasonable efforts to obtain any
consent, authorization or approval of, or exemption by, any Governmental Entity
or Person required to be obtained or made by any Party hereto in connection with
the transactions contemplated hereby or the taking of any action in connection
with the consummation thereof.
6.12 Maintenance of Insurance. Company shall maintain its policies of
insurance in full force and effect and shall not do, permit or willingly allow
to be done any act by which any of said policies of insurance may be suspended,
impaired or canceled.
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6.13 Discharge. Company shall not cancel, compromise, release or
discharge any Claim of Company upon or against any Person or waive any right of
Company of material value, and not discharge any Lien upon any asset of Company
or compromise any debt or other obligation of Company to any Person other than
Liens, debts or obligations with respect to current Liabilities of Company
without the prior consent of FNFI, which consent will not be unreasonably
withheld.
6.14 Actions. Company shall not institute, settle or agree to settle any
Action before any Governmental Entity without the prior consent of FNFI, which
consent will not be unreasonably withheld.
6.15 Taxes and Tax Assessments. Company shall pay, when due, and prior
to the imposition or assessment of any interest, penalties or Liens by reason of
the nonpayment of, all Taxes assessed against Company, its assets, properties or
operations, except for Taxes contested by Company in good faith. Company shall
furnish promptly to FNFI a copy of all notices of proposed assessment or similar
notices or reports that are received from any taxing authority and which relate
to Company's operations for periods ending on or prior to the Closing Date.
6.16 Line of Credit. Company shall maintain the outstanding principal
balance on its line of credit with Bank of America National Trust and Savings
Association, which line is evidenced by that certain Business Loan Agreement
attached to Schedule 4.28 hereto, in an amount less than One Million Dollars
($1,000,000).
ARTICLE 7
ADDITIONAL COVENANTS
7.1 Covenants of Company and Shareholders. During the period from the
date hereof through the Closing Date, Company and Shareholders (which for
purposes of this Article 7 shall include Xxxxxxxx) agree to:
(a) Comply promptly with all applicable Legal Requirements
imposed upon them with respect to the transactions contemplated by this
Agreement, and shall cooperate promptly with, and furnish information to, FNFI
in connection with any such requirements imposed upon FNFI or upon any of its
Affiliates in connection therewith or herewith;
(b) Use their reasonable efforts to obtain (and to cooperate with
FNFI in obtaining) any consent, authorization or approval of, or exemption by,
any Person required to be obtained or made by Company and/or Shareholders in
connection with the transactions contemplated by this Agreement;
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(c) Use their reasonable efforts to bring about the satisfaction
of the conditions precedent to Closing set forth in Section 8.1 below;
(d) Immediately advise FNFI orally and, within three (3) business
days thereafter, in writing of any change in Company's business or condition
that has had or may have a Material Adverse Effect;
(e) Deliver to FNFI prior to the Closing a written statement
disclosing any untrue statement in this Agreement or any Exhibit or Schedule
hereto (or supplement thereto) or document furnished pursuant hereto, or any
omission to state any material fact required to make the statements herein or
therein contained complete and not misleading, immediately upon the discovery of
such untrue statement or omission, accompanied by a written supplement to any
Exhibit or Schedule to this Agreement that may be affected thereby; provided,
however, that the disclosure of such untrue statement or omission shall not
prevent FNFI from terminating this Agreement pursuant to Section 9.1(b) hereof
at any time at or prior to the Closing in respect of any original untrue or
misleading statement;
(f) All Company indebtedness owed to Xxxxx X. Xxxxxxxx, Xxxx
Xxxxxx Xxxxxxxx, Xxxxx Meshkatai and Xxxxx Meshkatai, or any trust of which any
of them serve as trustee, shall be converted to Company Stock on or prior to the
Closing Date upon such terms and conditions and in a manner pre-approved by
FNFI; and
(g) Effect and consummate the merger of Express Reprographics,
Inc. ("ERI"), with and into Company in accordance with the California Statute
and upon such terms and conditions and in accordance with such documentation
pre-approved by FNFI in its absolute and sole discretion. Upon the consummation
of the merger, (i) all of the assets and liabilities of ERI existing as of July
31, 1997 (other than assets or liabilities acquired or disposed of in the
Ordinary Course of Business) shall be merged into Company; and (ii) all of the
capital stock of ERI, including all options, warrants, calls, conversion rights,
commitments or agreements of any character which relate to such capital stock,
shall be canceled and extinguished.
7.2 Covenants of FNFI. During the period from the date hereof to the
Closing Date, FNFI shall:
(a) Comply promptly with all applicable Legal Requirements
imposed upon it with respect to the transactions contemplated by this Agreement,
and shall cooperate promptly with, and furnish information to, Shareholders in
connection with any such requirements imposed upon Shareholders or Company or
upon any of Company's Affiliates in connection therewith or herewith;
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(b) Use its reasonable efforts to obtain any consent,
authorization or approval of, or exemption by, any Person required to be
obtained or made by FNFI in connection with the transactions contemplated by
this Agreement;
(c) Use its reasonable efforts to bring about the satisfaction of
the conditions precedent to Closing set forth in Section 8.2 of this Agreement;
and
(d) Cause Surviving Corporation to continue at least one (1)
significant historical business line of Company, or use at least a significant
portion of Company's historical business assets in a business, in each case in
accordance with Treasury Regulation Section 1.368-1.
7.3 Responsibility for Certain Potential Liabilities. Company and
Shareholders shall assume and be jointly and severally responsible for any and
all Liability, including without limitation any and all Tax Liability, caused
by, arising from, or related to (i) the failure of the Merger to qualify, in any
respects, as a tax-free reorganization pursuant to Code Section 368(a)(2)(D),
including any and all Liability incurred by FNFI, Newco and Surviving
Corporation as a result of such failure; and (ii) the pending Internal Revenue
Service audit of Company's 1993 Tax Returns.
7.4 Continuity of Interest. Shareholders shall not dispose of any shares
of Fidelity Common Stock in a manner that would cause the Merger to violate the
continuity of shareholder interest requirement set forth in Treasury Regulation
Section 1.368-1. If, during the first year following the Closing Date, any
Shareholder desires to dispose of any shares of Fidelity Common Stock issued in
connection with the Merger, then such Shareholder shall provide written notice
to FNFI, not less than sixty (60) days prior to the intended date of
disposition, specifying the number of shares of Fidelity Common Stock such
Shareholder desires to dispose.
7.5 Access and Information.
(a) During the period commencing on the date hereof and
continuing through the Closing Date, Shareholders shall cause Company to afford
to FNFI and to FNFI's accountants, counsel, and other representatives,
reasonable access to all of its properties, books, contracts, commitments,
records and personnel and, during such period, to cause Company to furnish
promptly to FNFI all information concerning its business, properties and
personnel as FNFI may reasonably request.
(b) Except to the extent permitted by the provisions of Section
7.8, below, FNFI shall hold in confidence, and shall use reasonable efforts to
ensure that its employees and representatives hold in confidence, all such
information supplied to it by Shareholders or Company concerning Company and
shall not disclose such information to any third Person except as may be
required by any Legal Requirement and except
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for information that (i) is or becomes generally available to the public other
than as result of disclosure by FNFI or its representatives; (ii) becomes
available to FNFI or its representatives from a third Person other than
Shareholders or Company, and FNFI or its representatives have no reason to
believe that such third Person is not entitled to disclose such information;
(iii) is known to FNFI or its representatives on a non-confidential basis prior
to its disclosure by Shareholders or Company; or (iv) is made available by
Shareholders or Company to any other Person on a non-restricted basis. FNFI's
obligations under the foregoing sentence shall expire on the Closing Date or, if
the closing does not occur, one year after the date hereof. If the Merger is not
consummated, then all information received by FNFI from CRI and all copies
thereof shall be returned or delivered to CRI, all computations or other studies
relating to CRI prepared by FNFI, its representatives or Affiliates shall be
destroyed, and FNFI shall supply CRI a sworn certificate that such delivery or
destruction has taken place and that FNFI, its representatives and/or Affiliates
no longer have in their possession any such documents, copies, computations or
other studies.
7.6 Expenses. All costs and expenses (including, without limitation, all
legal fees and expenses and costs) incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
the same.
7.7 Certain Notifications. At all times from the date hereof to the
Closing Date, each Party shall promptly notify the others in writing of the
occurrence of any event that will or may result in the failure to satisfy any of
the conditions specified in Article 8, below.
7.8 Publicity. At all times prior to the Closing Date, each Party shall
obtain the consent of all other Parties hereto prior to issuing, or permitting
any of its directors, officers, employees, agents or Affiliates to issue, any
press release or other information to the press, employees of Company or any
third party with respect to this Agreement or the transactions contemplated
hereby; provided, however, that no party shall be prohibited from supplying any
information to any of its representatives, agents, attorneys, advisors, and
others to the extent necessary to complete the transactions contemplated hereby
so long as such representatives, agents, attorneys, advisors, and others are
made aware of the terms of this Section 7.8. Nothing contained in this Agreement
shall prevent any party to this Agreement at any time from furnishing any
required information to any Governmental Entity or authority pursuant to a Legal
Requirement or from complying with its legal or contractual obligations.
7.9 Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each
of the Parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under
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applicable Legal Requirements, to consummate and make effective the transactions
contemplated by this Agreement.
(b) If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, Shareholders
and the proper officers or directors of FNFI and Company, as the case may be,
shall take or cause to be taken all such necessary or convenient action and
execute, and deliver and file, or cause to be executed, delivered and filed, all
necessary or convenient documentation, all at FNFI's expense.
7.10 Competing Offers. Shareholders agree that they will not, and will
cause Company not to, directly or indirectly, through an officer, director,
agent, or otherwise, solicit, initiate or encourage the submissions of bids,
offers or proposals by, any Person with respect to an acquisition of Company or
its assets or capital stock or a merger or similar transaction, and Shareholders
will not, and will not permit Company to, engage any broker, financial adviser
or consultant to initiate or encourage proposals or offers from other Persons.
Furthermore, Shareholders shall not, and shall not permit Company to, directly
or indirectly, through any officer, director, agent or otherwise, engage in
negotiations concerning any such transaction with, or provide information to,
any Person other than FNFI and its representatives with a view to engaging, or
preparing to engage, that Person with respect to any matters in this Section
7.10. Shareholders shall ensure that Company shall not commence any proceeding
to merge, consolidate or liquidate or dissolve or obligate itself to do so.
7.11 Post-Closing Employment. Except as provided in the Employment
Agreement attached hereto as Exhibit "B," Company and Shareholders acknowledge
and agree that after the Effective Time (i) neither FNFI nor Surviving
Corporation shall be required to employ or retain any employee of Company or any
other Person; and (ii) FNFI, in its sole and absolute discretion, may cause
Surviving Corporation to retain all, some, or none or such employees; provided,
however, that such post-closing terminations shall be in accordance with all
applicable laws, rules and regulations.
7.12 Employment Agreement. On or before the Closing Date, Farid
Meshkatai and the appropriate officer of Company shall execute the Employment
Agreement substantially in the form of Exhibit "B" hereto.
7.13 Registration Rights Agreement. On or before the Closing Date,
Shareholders and the appropriate officer of FNFI shall execute the Registration
Rights Agreement substantially in the form of Exhibit "C" hereto.
7.14 NYSE Listing. FNFI will make such filings as are necessary with the
New York Stock Exchange regarding the transactions contemplated hereby and will
cause the shares of Fidelity Common Stock to be issued under this Agreement to
be
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approved for listing on the NYSE, subject only to official notice of issuance,
prior to the Effective Time.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
8.1. Conditions of FNFI. FNFI's obligations hereunder to consummate the
Merger are subject to the satisfaction, at or prior to the Effective Time, of
all of the following conditions:
(a) Representations and Warranties True: Performance of
Obligations. The representations and warranties made by Company and Shareholders
in this Agreement shall be true, correct and complete on and as of the Closing
Date with the same force and effect as if they had been made on and as of said
date; and Company and Shareholders shall have performed all of the obligations
and complied with each and all of the covenants required to be performed or
complied with by them on or prior to the Effective Time.
(b) Material Adverse Effect. No act, event or condition shall
have occurred after the date hereof which FNFI determines in its reasonable
discretion has had or could have a Material Adverse Effect.
(c) Authorizations and Approvals. All authorizations, approvals
or consents from third parties, including from any Governmental Entity, landlord
or other Person, necessary for the consummation of the transactions contemplated
hereby shall have been obtained.
(d) Investigation of Company. FNFI shall have concluded (through
its representatives, accountants, counsel and other experts) a due diligence
investigation of the business, condition (financial, legal and other),
properties, assets, prospects, operations and affairs of Company and shall be
satisfied, in reasonable discretion, with the results thereof.
(e) Deliveries. FNFI shall have received from the appropriate
Party or Person, the delivery obligations set forth in Sections 3.2 through 3.4,
above.
(f) Schedules. Shareholders shall cause Company to deliver all of
the Schedules to this Agreement set forth herein, and FNFI shall be reasonably
satisfied with such Schedules.
(g) No Actions. There shall not be instituted and pending or
threatened any Action before any Governmental Entity (i) challenging the Merger
or
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otherwise seeking to restrain or prohibit the consummation of the transactions
contemplated hereby, or (ii) seeking to prohibit the direct or indirect
ownership or operation by FNFI of all or a material portion of the business or
assets of Company, or to compel FNFI or Company to dispose of or hold separate
all or a material portion of the business or assets of Company or FNFI.
(h) Corporate Action. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments, releases and documents
referenced herein or incident to the transactions contemplated hereby shall be
in form and substance satisfactory to FNFI and its counsel. Notwithstanding the
foregoing, FNFI shall advise Company and Shareholders of any perceived
deficiencies and provide Company and Shareholders with a reasonable period of
time to cure such deficiencies.
(i) Requisite Regulatory Approvals. All notices or filings
required to be made, all authorizations, permits, certificates, registrations,
consents, approvals or orders required to be obtained, and all waiting periods
required to expire, prior to the consummation of the transactions contemplated
by this Agreement under applicable federal law of the United States or
applicable laws of any state having jurisdiction over the transactions
contemplated by this Agreement or the businesses conducted by the Parties or any
Affiliate or Subsidiary of any Party (collectively, the "Requisite Regulatory
Approvals") shall have been obtained or expired, as the case may be, without the
imposition of any condition which is materially burdensome upon FNFI or any
Party or Person to be affected by such condition.
(j) CRI. All of the conditions to close set forth in Article 8.1
of that certain Agreement and Plan of Reorganization of even date herewith, by
and among FNFI, CRI, the shareholders of CRI, Xxxxxxxx, Xxxxx Meshkatai and CRI
Acquisition Corporation shall have been satisfied at or prior to the Effective
Time. In addition, the Closing of this Merger is conditioned upon the closing of
the CRI merger and vice versa.
(k) Classified Credit Data, Inc. Either (i) Xxxxxxxx shall have
sold all of his ownership interest in Classified Credit Data, Inc, a California
corporation, to FNFI in accordance with the terms and conditions set forth in
that certain letter dated August 18, 1997, a copy of which is attached hereto as
Exhibit "G;" or (ii) Xxxxx Xxxxxxxx shall have exercised her right of first
refusal to acquire such ownership interest in accordance with the terms and
conditions of that certain Shareholders' Agreement, dated May 9, 1988, by and
among CCD, Xxxxxxxx and Xx. Xxxxxxxx, and Xxxxxxxx and Xx. Xxxxxxxx shall have
completed such transfer of ownership interest.
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(l) Board Approval. The Board of Directors of FNFI shall have
approved this Agreement and the transactions contemplated thereby.
(m) Consent to Assignment of Line of Credit. Company and
Shareholders shall have obtained the consent of Bank of America National Trust
and Savings Association to the assignment of that certain Business Loan
Agreement described in Section 6.16, above, to Surviving Corporation, without
modification, amendment, acceleration or default. FNFI shall cooperate with
Company and Shareholders in obtaining the above consent.
8.2 Conditions of Company and Shareholders. Company's and Shareholders'
obligations hereunder to consummate the Merger are subject to the satisfaction,
at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by FNFI and Newco in this
Agreement shall be true and correct at the Closing Date, with the same force and
effect as if they had been made on and as of said date; and FNFI and Newco shall
have performed all obligations herein required to be performed by them at or
prior to the Closing.
(b) Authorizations and Approvals. All authorizations, approvals
or consents, if any, from third parties, including from any Governmental Entity
or other Person, necessary for the consummation of the transactions contemplated
hereby shall have been obtained.
(c) Tax-Free Reorganization. Each Shareholder shall be satisfied
in his or its reasonable discretion that the Merger qualifies as a tax-free
reorganization under Section 368(a)(2)(D) of the Code.
(d) Material Adverse Effect. No act, event or condition shall
have occurred after the date hereof which Company and Shareholder determines in
their reasonable discretion has had or could have a material adverse effect on
FNFI.
(e) Deliveries. Shareholders shall have received from the
appropriate Party or Person, the delivery obligations set forth in Sections 3.2,
3.5 and 3.6, above.
(f) No Actions. There shall not be instituted and pending or
threatened any Action before any Governmental Entity (i) challenging the Merger
or otherwise seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, or (ii) seeking to prohibit the direct or
indirect ownership or operation by FNFI of all or a material portion of the
business or assets of Company, or
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to compel FNFI or Company to dispose of or hold separate all or a material
portion of the business or assets of Company or FNFI.
(g) Corporate Action. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments, releases and documents
referenced herein or incident to the transactions contemplated hereby shall be
in form and substance satisfactory to Company and Shareholders and their
counsel. Notwithstanding the foregoing, Company and Shareholders shall advise
FNFI of any perceived deficiencies and provide FNFI with a reasonable period of
time to cure such deficiencies.
(h) CRI. All of the conditions to close set forth in Article 8.2
of that certain Agreement and Plan of Reorganization of even date herewith, by
and among FNFI, Credit Reports, Inc., a California corporation ("CRI"), the
shareholders of CRI, Xxxxxxxx, Xxxxx Meshkatai and CRI Acquisition Corporation
shall have been satisfied at or prior to the Effective Time. In addition, the
Closing of this Merger is conditioned upon the closing of the CRI merger and
vice versa.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) By mutual consent of the FNFI and Shareholders;
(b) By Shareholders and Company as a group, on the one hand, or
by FNFI, on the other hand, if there has been a material breach, failure to
fulfill or default on the part of the other Party of any of the representations
and warranties contained herein or in the due and timely performance and
satisfaction of any of the covenants, agreements or conditions contained herein;
or
(c) By Shareholders and Company as a group, on the one hand, or
by FNFI, on the other hand, if there shall be a final non-appealable order of a
federal or state court in effect preventing consummation of the Merger; or there
shall be any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any Governmental
Entity which would make the consummation of the Merger illegal.
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9.2 Effect of Termination. In the case of any termination of this
Agreement pursuant to Section 9.1, above, this Agreement shall forthwith become
void, and there shall be no Liability or obligation on the part of any Party or
its officers, directors or shareholders. Notwithstanding the foregoing sentence,
(i) the provisions of Section 7.5(b) and 7.6 shall remain in full force and
effect and survive any termination of this Agreement; (ii) each Party shall
remain liable for any breach of this Agreement prior to its termination; and
(iii) in the event of termination pursuant to section 9.1(b), above, then
notwithstanding the provisions of Section 7.6, above, the breaching Party shall
be liable to the non-breaching Party to the extent of the expenses incurred by
such other party in connection with this Agreement and the transactions
contemplated thereby.
9.3 Amendment. This Agreement may be amended at any time by a written
instrument executed by the Parties. Any amendment effected pursuant to this
Section 9.3 shall be binding upon all Parties.
9.4 Waiver. Any term or provision of this Agreement may be waived in
writing at any time by the Party or Parties entitled to the benefits thereof.
Any waiver effected pursuant to this Section 9.4 shall be binding upon all
Parties hereto. No failure to exercise and no delay in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude the exercise of any
other right, power or privilege. No waiver of any breach of any covenant or
agreement hereunder shall be deemed a waiver of a preceding or subsequent breach
of the same or any other covenant or agreement. The rights and remedies of each
Party under this Agreement are in addition to all other rights and remedies,
whether at law, in equity or otherwise, that such Party may have against the
other Parties.
ARTICLE 10
INDEMNIFICATION
10.1 Survival of Representations and Warranties. The representations and
warranties of Company and Shareholders (which for purposes of this Article 10
shall include Xxxxxxxx) contained in this Agreement or in any writing delivered
pursuant hereto or at the Closing and the indemnification obligations set forth
in Section 10.2, below, shall survive the Closing and the consummation of the
transactions contemplated hereby until the second (2nd) anniversary of the
Closing Date; provided that the representations and warranties contained in
Sections 4.2, 4.4, 4.11 and 4.20 and the indemnification obligations related
thereto shall continue until the expiration of the applicable statutes of
limitations; and provided further that Company's indemnification obligations
under Section 10.2, below, shall terminate immediately subsequent to the
Effective Time.
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10.2 Indemnification by Company and Shareholders. Company and
Shareholders, jointly and severally, covenant and agree to indemnify, defend,
protect and hold harmless FNFI, Newco and Surviving Corporation and their
respective officers, directors, employees, shareholders, assigns, successors and
affiliates (a "FNFI Indemnified Party") from, against and in respect of all
Claims suffered, sustained, incurred or paid by any FNFI Indemnified Party in
connection with resulting from or arising out of, directly or indirectly:
(a) any breach of any representation or warranty of any
Shareholder or Company set forth in this Agreement or any certificate,
document or instrument delivered by or on behalf of any Shareholder or
Company in connection herewith; or
(b) any non-fulfillment of any covenant or agreement on the part
of any Shareholder or Company in this Agreement.
10.3 Indemnification by FNFI. FNFI covenants and agrees to indemnify,
defend, protect and hold harmless Shareholders and their respective heirs,
successors and assigns (a "Shareholder Indemnified Party") from, against and in
respect of all Claims suffered, sustained, incurred or paid by any Shareholder
Indemnified Party in connection with resulting from or arising out of, directly
or indirectly:
(a) any breach of any representation or warranty of FNFI or Newco
set forth in this Agreement or any certificate, document or instrument
delivered by or on behalf of FNFI or Newco in connection herewith; or
(b) any non-fulfillment of any covenant or agreement on the part
of FNFI or Newco in this Agreement.
10.4 Third Party Claims. In the event any third party asserts any Claim
with respect to any matter as to which the indemnities in this Agreement relate,
the Party or Person against whom the Claim is asserted (the "Indemnified Party")
shall give prompt notice to the other Party or Person (the "Indemnifying
Party"), and the Indemnifying Party shall have the right at its election to take
over the defense or settlement of the third party Claim at its own expense by
giving prompt notice to the Indemnified Party. If the Indemnifying Party does
not give such notice and does not proceed diligently so to defend the third
party Claim within thirty (30) days after receipt of the notice of the third
party Claim, the Indemnifying Party shall be bound by any defense or settlement
that the Indemnified Party may make as to those claims and shall reimburse the
Indemnified Party for its losses and expenses related to the defense or
settlement of the third party Claim. The Parties shall cooperate in defending
against any asserted third party Claims. For purposes of this Article 10, the
reference to this Agreement includes any certificate, Schedule or Exhibit
delivered to a party by the Indemnifying Party or
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its agents and affiliates in connection with this Agreement. The election by the
Indemnifying Party to take over a defense or settlement of the third party Claim
shall not constitute an admission that the Claim is indemnified against under
this Agreement; the question of whether the Claim is one which is subject to
indemnity under this Article 10 shall be determined separately from the
assumption of the defense. If the Indemnifying Party asserts in a notice to the
Indemnified Party that it does not believe that the Claim is one which it has
agreed to indemnify the Indemnified Party under this Agreement and it is later
determined that the Claim was in fact not subject to the indemnities provided
for in this Article 10, then the Indemnified Party will indemnify, reimburse and
hold harmless the Indemnifying Party against all Liability under the third party
Claim and the costs and expenses (including reasonable attorneys' fees) which
the Indemnifying Party incurs by reason of defense of the third party Claim.
10.5 Indemnification Non-Exclusive. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common-law remedy any Party may have for breach of representation,
warranty, covenant or agreement.
10.6 Additional Indemnification Provisions. Notwithstanding anything to
the contrary in this Article 10, (i) Shareholders' aggregate Liability under
Section 10.2, above, shall not exceed Two Million Five Hundred Thousand Dollars
($2,500,000); (ii) Shareholders shall not incur any Liability under section
10.2, above, until the aggregate amount of indemnification obligations exceed
Ten Thousand Dollars ($10,000); and (iii) subject to clause (ii) above,
Shareholders shall not incur any Liability under Section 10.2, above, for
indemnification obligations that individually do not exceed One Thousand Dollars
($1,000).
ARTICLE 11
GENERAL PROVISIONS
11.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
Parties hereto.
11.3 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto, and the other documents delivered at the Closing pursuant hereto
constitute the full and entire understanding and agreement among the Parties
with regard to the subject matter hereof and no Party shall be liable or bound
to any other Party in any manner by any representations, warranties, covenants,
or agreements except as specifically set forth herein or therein. Nothing in
this Agreement, express or implied, is intended to confer upon any party, other
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than the Parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or Liabilities under or by reason of this Agreement,
except as expressly provided herein.
11.4 Severability. In the event any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the Parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
11.5 Notice. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given (i) if
delivered personally (including by overnight express or messenger), upon
delivery; (ii) if delivered by registered or certified mail, return receipt
requested, upon the earlier of actual delivery or three (3) days after being
mailed; or (iii) if given by facsimile, upon confirmation of transmission by
facsimile, in each case to the Parties at the following addresses:
(a) If to FNFI, addressed to:
Fidelity National Financial, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
C. Xxxxx Xxxxxxx, Esq.
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
(b) If to Shareholders, addressed to:
Xxxxx X. Xxxxxxxx Xxxxx Meshkatai
00000 X. 000xx Xxxxx 0000 X. 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxx Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile (000) 000-0000
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With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxx, Xxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
11.6 Tax Advice. Company, Shareholders and Xxxxxxxx acknowledge that
they have received their own independent tax advice with respect to the Merger,
this Agreement and the transactions contemplated thereby, including whether the
Merger qualifies as a tax free reorganization in accordance with Section
368(a)(2)(D) of the Code, and are not in any way relying on any statements or
advice of FNFI, Newco or any of their officers, directors, employees, agents or
representatives.
11.7 Construction. The Parties to this Agreement have participated
jointly in the negotiation and drafting of this Agreement and have had competent
counsel of their own choosing. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
11.8 Headings. The headings of the Articles and Sections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
11.10 Recitals, Schedules, and Exhibits. The Recitals, Schedules and
Exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth at length herein. Anything referenced on any
Schedule hereto shall be deemed incorporated into any other Schedule requesting
the same or similar information.
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IN WITNESS WHEREOF, the foregoing Agreement is hereby executed as of the
date first above written.
FNFI:
FIDELITY NATIONAL FINANCIAL, INC.,
a Delaware Corporation
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Its: EXECUTIVE VICE PRESIDENT
----------------------------------
COMPANY:
EXPRESS NETWORK, INC., a California
Corporation
By: /s/ FARID MESHKATAI
----------------------------------
Its: PRESIDENT
----------------------------------
SHAREHOLDERS:
COLIN XXXXXX XXXXXXXX AND XXXX
XXXXXX XXXXXXXX, AS TRUSTEES OF THE
XXXXXXXX FAMILY TRUST UDT, DATED
JULY 23, 1987
/s/ XXXXX X. XXXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxxx, Trustee
/s/ XXXX XXXXXX XXXXXXXX
----------------------------------------
Xxxx Xxxxxx Xxxxxxxx, Trustee
/s/ FARID MESHKATAI
----------------------------------------
Farid Meshkatai, Individually
XXXXX XXXXXX MESHKATAI, AS TRUSTEE
OF THE XXXXX XXXXXX LIVING TRUST,
DATED JULY 23, 1987
/s/ XXXXX XXXXXX MESHKATATI
----------------------------------------
Xxxxx Xxxxxx Meshkatai, Trustee
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